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Stocks Finish Near Session Highs After Brief Plunge on 'Bogus' AP Tweet; Dow Soars 150

Stocks ended a volatile day with strong gains Tuesday after taking a sharp nosedive in midday trading, following a false Twitter post of two explosions in the White House.

(After-Hours Buzz: AAPL, YUM, AMGN & More)

Stocks took a steep plunge following a false AP tweet that indicated that the White House had been the victim of an explosion and that President Obama had been injured. The AP confirmed its Twitter account was hacked and the spokesman said the tweet was "bogus." The Twitter account was suspended shortly after the fake tweet.

(Read More: Hackers Compromise @AP Twitter Account)

White House Press Secretary Jay Carney held a press conference shortly following AP's Twitter post, saying "the President is fine."

"That goes to show you how algorithms read headlines and create these automatic orders – you don't even have time to react as a human being," said Kenny Polcari of O'Neill Securities. "I'd imagine the SEC's going to look into how this happened. It's not about banning computers, but it's about protection and securing our markets."

Almost immediately following the tweet, the Dow Jones Industrial Average took a quick 143-point dive, before recovering most of its losses within minutes. The three-minute plunge triggered by the tweet briefly wiped out $136.5 billion of the S&P 500 index's value, according to Reuters data. The Dow finished up 152.29 points, or 1.05 percent, to end at 14,719.46.

Interestingly, Tuesday has been the best day of the week for the blue-chip this year with an average return of 0.46 percent. If the index closes in the black today, it will have been up for the 15th consecutive Tuesday. The last time the Dow rose for 15 straight Tuesdays was in 1927. The index rose 27.7 percent in that year.

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The S&P 500 jumped 16.28 points, or 1.04 percent, to close at 1,578.78. The Nasdaq rallied 35.78 points, or 1.11 percent, to finish at 3,269.33. All three major averages are now back in positive territory for April.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, fell below 14.

All key S&P sectors closed in positive territory, led by financials and techs.

On the economic front, new home sales gained 1.5 percent in March to an adjusted annual rate of 417,000, according to the Commerce Department, in the latest sign pointing to a recovery in the housing market.

"The U.S. is continuing to slowly improve and the way the sequester impact is coming through will be front-loaded and the heaviest negative impact will be seen in the earlier months," said Natalie Trunow, CIO of Calvert Investments. "But we'll work our way out of it over the course of the year and the negative impact will dissipate. At the same time, the positive impact of housing and the overall recovery will continue to accelerate and will cancel out and take over the negatives later in the year."

Among earnings, Travelers rallied after the insurance company posted a higher-than-expeted profit, helped by a decline in natural disaster losses and rising insurance rates.

Dow components Du Pont and United Technologies both posted earnings that beat on profit. Du Pont shares edged higher while United Technologies slipped after both companies disappointed on top-line revenue.

Blowout earnings after-the-bell Tuesday from Netflix also helped boost sentiment. The company traded above $200 a share for the first time since September 2011.

Coach soared after the leather goods maker posted higher-than-expected results and lifted its annual dividend.

(Read More: Earnings Flash Warning Sign for Stocks)

Apple earnings will be the main focus after the closing bell in addition to Dow industrial component AT&T. Norfolk Southern, Amgen, and Yum Brands are also among notable companies slated to post results. Apple has lost $287 billion in market capitalization, or 44 percent of its value, since hitting its all-time high in September.

(Read More: Get Ready for Apple Earnings — Decent or Disaster?)

So far, nearly a quarter of S&P 500 companies have reported results this quarter with 69 percent of companies beating and 21 percent missing estimates. Meanwhile, only 41 percent of companies have topped their revenue expectations, while 59 percent have fallen short of forecasts, according to the latest data from Thomson Reuters.

"Overall, earnings have been fine, but not stellar and therefore, there's been a bit of 'sell on the news' mentality," said Trunow. "And we've seen some healthy returns so far this year, so some folks are likely to take some profit amid the earnings season—there's no meaningful catalyst to boost the market in the short term, although I remain bullish in the longer term."

Meanwhile, Asian stocks finished lower after HSBC's preliminary survey of factory managers showed the expansion in factory activity in China eased in April, renewing fears of a slowdown in the world's second biggest economy.

(Read More: Uh-Oh, China's PMI Miss Spells Trouble Ahead)

However, shares in Europe were boosted by better-than-expected PMI (purchasing managers' index) data from France, although Germany posted a sharp drop in business activity.

The government auctioned $35 billion in 2-year notes at high yield 0.233 percent. The bid-to-cover ratio, an indicator of demand, was at 3.63.

—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

Coming Up This Week:

WEDNESDAY: MBA mortgage applications, durable goods orders, oil inventories, 5-yr note auction, AB InBev shareholder mtg, Caesar Entertainment shareholder mtg, Citi shareholder mtg, Coca-Cola shareholder mtg, DuPont shareholder mtg, GE shareholder mtg; Earnings from Barclays, Boeing, Credit Suisse, Ford, Eli Lilly, GlaxoSmithKline, P&G, Sprint Nextel, Qualcomm, Aflac, Akamai, Cabot Oil & Gas, Zynga
THURSDAY: Jobless claims, natural gas inventories, 7-yr note auction, Fed balance sheet/money supply, Barclays annual mtg, Herbalife shareholder mtg, Intuitive Surgical annual mtg, J&J shareholder mtg, NYSE Euronext shareholder mtg, Pfizer shareholder mtg; Earnings from Altria, AstraZeneca, Bristol-Myers, ConocoPhillips, ExxonMobil, 3M, UPS, Altera, Baidu, Expedia, Starbucks, Coinstar
FRIDAY: GDP, consumer sentiment, AT&T shareholder mtg; Earnings from Chevron, Honda, DR Horton

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