Stocks lift even as oil prices soar to $122 a barrel

Weakness in the financial and housing-related sectors on Tuesday initially sparked some selling on Wall Street, but those dips were soon met by bargain-hunters, who are betting that financials are a good buy right now given their low prices.

Fannie Mae shares rebounded to rise $1.80, or 6.4 percent, to $30.10 on the belief that the government-sponsored mortgage company may be putting the worst of the credit crisis behind it. Fannie Mae on Tuesday reported a larger-than-expected first-quarter loss of $2.2 billion, and said it plans to lower its dividend and raise $6 billion in additional capital.

In other earnings news Tuesday, UBS reported a loss of nearly $11 billion and said it is reducing its work force by about 7 percent. UBS shares dipped 20 cents to $34.10.

Homebuilder D.R. Horton reported a quarterly loss of $1.3 billion and halved its dividend to 7.5 cents a share. The homebuilder's shares rose 60 cents, or 3.6 percent, to $16.56.

Meanwhile, Wachovia Corp. said it is nearly doubling its previously reported loss for the first quarter to $708 million after reviewing its portfolio of bank-owned life insurance. Wachovia's stock rose 35 cents to $30.13.

Gold climbed, while the dollar fell against most other major global currencies.

The Russell 2000 index of smaller companies rose 4.77, or 0.66 percent, to 729.12.

Advancing issues outnumbered decliners by about 9 to 7 on the New York Stock Exchange, where volume amounted to a light 531.7 million shares.

Overseas, Japan's stock market was closed for a holiday. In Europe, Britain's FTSE index finished flat, Germany's DAX index fell 0.50 percent, and France's CAC-40 fell 0.44 percent.

Cisco Systems and Walt Disney Co., one of the 30 companies that make up the Dow, are scheduled to release quarterly results after the market closed Tuesday.