* U.S. durable goods orders unexpectedly plunge in December
* Apple shares drop on muted iPhone sales, outlook
* Federal Reserve starts two-day policy meeting
* Dow up 0.6 pct; S&P 500 up 0.6 pct; Nasdaq up 0.2 pct
By Caroline Valetkevitch
NEW YORK, Jan 28 U.S. stocks rose on Tuesday in a modest relief rally after three days of losses on the S&P 500, with investors eying the Federal Reserve's next move on its stimulus.
Bucking the day's trend and limiting gains on the Nasdaq and S&P 500, shares of Apple Inc dropped 7.7 percent to $507.63, a day after holiday iPhone sales missed expectations.
Shares of Pfizer boosted both the Dow and S&P 500 after its better-than-expected quarterly profit.
The market rebound came after heavy losses tied to concerns about withdrawal of U.S. monetary stimulus as well as worries about emerging markets, including slowing Chinese growth and political turmoil from Turkey to Thailand. Last week, the S&P 500 marked its worst percentage loss since June 2012.
"Maybe some relief of the selling pressures is the cause for the rally," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
Market participants were looking at recent soft economic data, a mixed earnings season and concerns about what's happening in non-U.S. equity markets, he said. As a result, "there is a growing collection of wisdom the Fed may postpone its tapering regime tomorrow."
Orders for long-lasting U.S. manufactured goods unexpectedly fell 4.3 percent in December, and a gauge of planned business spending on capital goods also slid, which could cast a shadow on an otherwise bright economic outlook.
The durable goods report preceded the start of a two-day policy meeting of the U.S. Federal Reserve. Investors will closely watch the outcome to see if the Fed will cut another $10 billion from its monthly bond-buying program.
The Dow Jones industrial average rose 91.22 points or 0.58 percent, to 15,929.1, the S&P 500 gained 10.65 points or 0.6 percent, to 1,792.21 and the Nasdaq Composite added 9.474 points or 0.23 percent, to 4,093.083.
A bright spot in the economic data was a report showing U.S. consumer confidence rose in January. Consumers grew more optimistic about both business conditions and the job market, according to the Conference Board.
Apple shares fell to their lowest since October. The tech bellwether's iPhone sales in the holiday shopping season missed lofty expectations and the company forecast weak revenue for the current quarter in quarterly results released on Monday after the closing bell.
Shares of Apple suppliers such as Qualcomm Inc and Cirrus Logic Inc also tumbled and pulled on the Nasdaq.
Activist investor Carl Icahn said he bought another half-billion dollars' worth of Apple stock, his third investment in the iPhone and iPad maker in less than a week. The purchase boosts his stake to more than $4 billion.