Stocks rose sharply Tuesday, with the Dow logging its best percentage gain since Dec. 21, as better-than-expected corporate results lifted the mood on Wall Street and gave investors hope that the market's sluggish start to 2005 might soon turn around.

The Dow Jones industrial average (search) ended up 92.95 points, or 0.90 percent, at 10,461.56. The Standard & Poor's 500 Index (search) was up 4.66 points, or 0.40 percent, at 1,168.41. The Nasdaq Composite Index (search) was up 11.25 points, or 0.56 percent, at 2,019.95.

The session's gains reversed some of the slide racked up this year — which on Monday saw stocks close at their lowest point since November. On Tuesday, the Dow notched its biggest percentage gain in just over a month.

"It reflects a number of positive earnings reports and a somewhat over-sold stock market," said Michael Sheldon, chief market strategist at New York brokerage Spencer Clarke. "The consumer confidence data was pretty positive," he added.

After the closing bell, Texas Instruments Inc. (TXN), the world's largest maker of chips for cell phones, reported earnings that topped a forecast it gave in December. Its shares closed the ordinary session trading up 29 cents at $21.12, but were halted after the close of markets.

Johnson & Johnson (JNJ) rose about .6 percent, or $2.19 to $63.68, after its fourth-quarter profit beat analysts' estimates. The diversified health-care company also said it backed its forecast for 2005 earnings and it expects double-digit operational growth in 2006.

DuPont Co. (DD), the No. 2 U.S. chemical maker, rose 1.2 percent, or 57 cents to $46.58, after it forecast earnings growth in 2005

"We were oversold — the market was due for this," said Peter Boockvar, equity strategist at Miller Tabak & Co. "A few things have come together — earnings so far this morning have been pretty good."

However, the market's gains were somewhat deceptive. Declining issues outnumbered advancers by a slim margin on the New York Stock Exchange (search) and advancers outpaced decliners by only 8 to 7 on the Nasdaq Stock Market — signs that investors are picking their stocks very carefully and are quick to sell underperfomers.

The plethora of earnings reports helped investors overcome ongoing fears about the upcoming Iraqi elections and oil prices that continued to push toward $50 per barrel. A barrel of light crude rose 83 cents at $49.64 on the New York Mercantile Exchange (search).

In economic news, the Conference Board's (search) gauge of consumer confidence rose to 103.4 in January, up from 102.7 in December. The index surpassed economists' forecast of 101.0.

However, reaction to that consumer confidence was slightly muted after a report from the National Association of Realtors (search) that said sales of existing homes in the United States fell by 3.3 percent in December from a record November high.

"The consumer confidence headline number is better than expected — but the response is a little muted because the existing home sales were a bit lighter and people have been worried about the housing bubble possibly bursting," said Tim Heekin, director of trading at San Francisco investment bank Thomas Weisel Partners.

"On top of that, you had decent numbers from some of the pharmaceuticals, so they are the leadership today."

Merrill Lynch & Co. (MER) the biggest U.S. brokerage, rose $1.19 to $57.99 after it said its fourth-quarter profit fell 1.8 percent but beat analysts' expectations.

Xerox Corp. (XRX) rose almost 2 percent to $15.56 after the office equipment maker said fourth-quarter profit rose 15 percent, fueled by solid demand for new digital color printers and document services.

Pharmaceuticals were the best performing sector in the S&P 500.

Merck (MRK) added $1.10 to $30.95 after posting earnings that matched analysts' forecasts of 50 cents per share. Profits fell 21 percent due to lost sales and a legal reserve connected to Vioxx, the arthritis drug pulled from the market Sept. 30 due to increased risks of heart attack and stroke. The company nonetheless managed a 2 percent increase in revenue for the quarter, better than Wall Street expected.

Ford Motor Co. (F) warned that income from its financial services division would slip in 2005, and said its first quarter income would fall well below current Wall Street forecasts. Ford nonetheless gained 16 cents to $13.23

U.S. Steel (X) swung to a profit for the fourth quarter, compared to a year ago, as the global steel market improved and the company implemented cost-cutting measures. The company beat Wall Street forecasts by 84 cents per share. U.S. Steel climbed 79 cents to $51.16.

Among today's losers, Sara Lee Corp. (SLE), maker of Hanes underwear and Jimmy Dean sausage, fell about 7 percent to $23.27 after it cut its fiscal-year earnings outlook, citing higher meat commodity prices and a price war in European household products.

The Russell 2000 index of smaller companies was up 1.97, or 0.33 percent, at 606.50.

Overseas, Japan's Nikkei stock average fell 0.11 percent. In Europe, Britain's FTSE 100 closed up 0.64 percent, France's CAC-40 gained 0.87 percent for the session, and Germany's DAX index rose 0.76 percent.

Reuters and the Associated Press contributed to this report.