Dow Tops 13,000, Nasdaq Spikes Above 3,000

Stocks ended near session highs Tuesday, with all three major averages logging their best rally in a month, helped by a handful of positive earnings reports and as fears over Europe diminished.

S&P 500

The Dow Jones Industrial Average surged 194.13 points, or 1.50 percent, to close at 13,115.54, soaring back above the 13,000 milestone. All 30 blue-chip components ended in positive territory, led by Kraft and Disney .

The S&P 500 jumped 21.21 points, or 1.55 percent, to end at 1,390.78. The Nasdaq rallied 54.42 points, or 1.82 percent, to finish at 3,042.82.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, closed below 18.

All key S&P sectors finished firmly in positive territory, led by energy and techs.

“There’s a huge tug of war between Europe and earnings and right now, earnings are winning,” said Burt White, CIO of LPL Financial, on CNBC's Power Lunch. “But the economic data is going to be an important factor and you’re beginning to see some cracks in the foundation.”

Still, White said the market is setting itself up for a good investing environment.

“Two weeks after report, earnings have really driven stock prices and we’re sitting right in the middle of that,” he explained. “Eleven of the last 12 quarters we’ve seen positive gains for the market in the two weeks after Alcoa —we’re only five days post, so we have another week of this going.”

Apple rallied above $600 after a weak open, rebounding from five-straight days of losses. The recent decline marks the stock's biggest 5-day drop in more than three years. The iPad maker is now down nearly 10 percent from its record intraday high of $644.00 on April 10.

Citigroup gained after Meredith Whitney Advisory Group upgraded the financial giant to"hold" from "underperform." This comes after Citi posted earnings that topped estimates on Monday.

Goldman Sachs posted earnings that were better-than-expected, helped by aggressive cost-cutting, strong investment banking and trading revenues. In addition, the financial giant raised its dividend.

Coca-Cola earnings and revenue also topped forecasts, thanks to increased prices and volume. And fellow Dow component Johnson & Johnson's earnings also beat expectations.

Tech giants IBM , Intel and Yahoo are slated to post earnings after-the-bell tonight.

Joe Bell, senior equities analyst at Schaeffer's Investment Research has a 1,525 year-end price target on the S&P 500, adding that the market is in a period of consolidation, rather than a correction.

“The strong price action, coupled with decline expectations and the overall negative market sentiment is all going to be a positive for stocks going forward," he said.

President Obama unveiled a $52 billion program to strengthen federal supervision of oil markets. Despite his efforts, experts say the proposal is more likely to draw sharp election-year distinctions with Republicans than have an immediate effect on prices at the pump.

U.S. light, sweet crude traded above $104 a barrel, while London Brent traded slightly below $119 a barrel.

Meanwhile, Cheniere Energy rallied after the government granted the energy company permission to build a facility that would make it the first large-scale natural gas exporter in the nation. Other natural gas companies jumped, including Alpha Natural , NRG Energy and Cabot Oil & Gas .

First Solar spiked to lead the S&P 500 gainers after the firm announced it would slash about 30 percent of its workforce and close some manufacturing operations as part of its cost-cutting efforts. Solar companies have been struggling in the last year amid a decline in selling prices and a handful of companies have already declared bankruptcy. Rival Suntech Power also rallied.

On the economic front, housing starts tumbled an unexpected 5.8 percentto a seasonally adjusted annual rate of 654,000 units last month, according to the Commerce Department.

“Building permit was at the highest level since September 2008 so perhaps people are taking that as a positive sign,” noted Bell. “You’re not going to have consistent uptrend every month, but we have seen some improvement over the past few months on housing and so we’re encouraged on the fundamental front.”

The housing news follows the disappointing homebuilder sentimentreport in the previous session.

Meanwhile, industrial production was flat for a second-consecutive month in March, according to the Federal Reserve, suggesting a slowdown in factory activity.

European shares closed sharply higher after a well-received Spanish debt auction. (Watch: Is Spain a 'Tumor' in the Eurozone?—Pimco CIO) Meanwhile, Egan Jones downgraded Spain's debt rating to BBB- from BBB.

—Follow JeeYeon Park on Twitter: @JeeYeonParkCNBC

Coming Up This Week:

WEDNESDAY: Weekly mortgage apps, oil inventories; Earnings from Abbott Labs, BlackRock, Bank of NY Mellon, Halliburton, Ebay, Qualcomm, Yum Brands
THURSDAY: Jobless claims, existing home sales, Philadelphia Fed survey, leading indicators; Earnings from BofA, DuPont, Morgan Stanley, Nokia, Travelers, Verizon, Microsoft, AMD, Capital One, SanDisk
FRIDAY: Earnings from GE, McDonald's, Schlumberger

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