Stocks rose Tuesday as oil prices fell from the seven-week-high they briefly touched and investors focused on a raft of positive earnings reports, particularly from the financial sector.

The Dow Jones industrial average (search) finished up 70.79 points, or 0.67 percent, at 10,628.79. The Standard & Poor's 500 Index (search) rose 11.46 points, or 0.97 percent, to 1,195.98. The Nasdaq Composite Index (search) was up 18.13 points, or 0.87 percent, at 2,106.04.

The Dow, S&P and Nasdaq closed at their highest levels in about two weeks.

Oil prices erased earlier gains, with U.S. February crude futures settling unchanged at $48.38 a barrel on the New York Mercantile Exchange (search) — reversing an initial climb to $49.50 as a bitter cold front swept across the U.S. Northeast.

"I think there's a bias toward optimism on the part of investors, but mostly it's just wait and see," said Hugh Johnson, chief investment officer at First Albany Corp. "We've had good earnings, but it's only this week that we'll be getting into the real heart of earnings season."

Among a slew of companies reporting earnings was Bank of America, the No. 3 U.S. bank, which closed up nearly 2 percent, or 84 cents to $45.73 after it reported a 41 percent rise in fourth-quarter profit.

After the closing bell, International Business Machines Corp. (IBM) posted a quarterly net profit that beat Wall Street's recently raised target as solid year-end product sales were buoyed by a weaker U.S. dollar. Shares of Big Blue rose 60 cents, or 0.6 percent, to $95.50 in post close trading on the Inet electronic exchange. IBM closed up 80 cents at $94.90 during the regular session.

Short covering and program buying were a factor buoying stocks Tuesday, said Andre J. Bakhos, president of Princeton Financial Group.

Short-covering is the buying back of a share which was previously sold to close out a short position. Short-sellers borrow shares, then sell them, waiting for the stock to fall so they can buy the shares at the lower price, return them to the lender and pocket the difference. Program buying is the automated buying of blocks of shares according to predetermined parameters, such as price and time of day.

"I think you saw a handful of investors deciding that the S&P, in particular, had gone down far enough and decided to place some big bets, and that started us off toward positive territory," said Brian Williamson, an equity trader at The Boston Company Asset Management. "And that move, with earnings going well and oil prices falling, kind of cascaded to the point we're at now."

Among other banks reporting earnings, Wells Fargo & Co. (WFC), U.S. Bancorp and National City Corp. all gained after posting increased profits. Wells Fargo rose 1.3 percent, or 77 cents to $61.46, U.S. Bancorp (USB) gained 2.8 percent, or 84 cents to $31.03, and National City (NCC) gained 3.3 percent, or $1.15 to $36.37.

But Dow component 3M Co. (MMM) , the maker of Scotch tape and Post-It notes, fell 2.3 percent, or $1.95 to $81.02 after the performance of its display and graphics unit was weaker than some analysts expected.

In other news, shares in May Department Stores Co. (MAY) shot higher as the resignation of its chief executive prompted analyst upgrades — and some bid speculation — on hopes of a turnaround for the company. The stock rose 16 percent, or $4.37 to $32.21.

The strong earnings reports from the financial sector led to optimism that the Federal Reserve — seeing confidence in corporate America and some strength in the dollar over the past week — would not abandon its gradual pace in raising interest rates.

Oil companies were given a boost by Morgan Stanley raising its fourth quarter estimates for integrated oils — ones which explore, drill and refine — citing stronger-than-expected oil and gas prices. It named ConocoPhillips (COP), Marathon Oil Corp. (MRO) and Exxon Mobil Corp. (XOM) as its favorite integrated oil stocks. Conoco rose 1.2 percent, or $1.10 to $90.12, Marathon edged up 46 cents, or 1.2 percent, to $38.76 and Exxon nudged up 43 cents to $51.50.

Electronic Arts Inc. (ERTS) shares climbed 2 percent, or 97 cents to $60.81, after the video game publisher announced a 15-year licensing deal with sports broadcasts ESPN Monday.

Charles Schwab Corp. (SCH) rose 27 cents to $11.39 as the discount brokerage took $62 million in charges due to cost-cutting measures and the closure of its capital markets business. Without the charges, Schwab beat Wall Street profit expectations by a penny per share.

Ameritrade Holding Corp. (AMTD) surpassed profit forecasts by 3 cents per share in its latest quarter, buoyed by strong client balances and a positive interest rate environment. The online brokerage also increased its 2005 profit estimates. Ameritrade gained 42 cents to $12.85.

Drug maker Abbott Laboratories Inc. (ABT) lost 21 cents at $46.04 after matching Wall Street's estimates. The company also reiterated its 2005 outlook, expecting sales growth of 10 percent to 12 percent.

Charter Communications Inc. (CHTR) announced that Carl Vogel, the company's president and chief executive, has resigned from the cable television giant. The resignation was by mutual agreement, the company said. Vogel also gave up his seat on Charter's board. The company was down 13 cents at $1.92.

Krispy Kreme Doughnuts Inc. (KKD), facing a federal accounting investigation and sagging profits, said its CEO, Scott Livengood, is also retiring as part of an executive shakeup. The company reported an 18 percent drop in sales over the past two months. Krispy Kreme rose 89 cents, or 10.21 percent, to $9.61.

Net inflows of capital into U.S. assets rose to $81 billion in November, the Treasury Department said before the stock market opened. Analysts had been expecting inflows — a measure of foreigners' appetite for U.S. assets — of around $55 billion.

The Russell 2000 index of smaller companies was up 7.39, or 1.2 percent, at 624.87.

Overseas, Japan's Nikkei stock average fell 0.56 percent. In Europe, Britain's FTSE 100 closed down 0.47 percent, France's CAC-40 slid 0.17 percent for the session, and Germany's DAX index rose 0.12 percent.

Reuters and the Associated Press contributed to this report.