Stocks rose on Tuesday as a solid profit from Caterpillar Inc eclipsed unease about the company's outlook for the current quarter, but the gains were limited as some investors paused following the recent earnings-fueled run-up.

Trading was choppy, with the broader market initially charging higher after the open and the benchmark S&P 500 <.SPX> hitting a fresh 2009 intraday high as it extended its rebound from the 12-year closing low of early March.

A late push helped the Nasdaq eke out a small gain for its 10th straight winning session, the longest in 12 years.

Investors were encouraged by another round of strong profit reports from bellwethers that included drugmaker Merck & Co , a Dow component. But that optimism was met with a dose of reality when heavy equipment maker Caterpillar, another Dow component, warned the current quarter could be tough.

In addition, U.S. Federal Reserve Chairman Ben Bernanke said in testimony before a congressional panel that mounting joblessness, slumping home values and tight credit were likely to curb consumer spending -- a major driver of U.S. economic growth and corporate profits.

People can get a bit euphoric with a couple of positive economic numbers and earnings ... but you're going to have to see how this pans out over the long term, said Stephen Carl, principal and head of U.S. equity trading at The Williams Capital Group in New York.

I think you do a little profit-taking now, go through the summer and see how the rest of second-quarter earnings come out, and then kind of ascertain what's going on after that.

The Dow Jones industrial average <.DJI> gained 67.79 points, or 0.77 percent, to 8,915.94. The Standard & Poor's 500 Index <.SPX> rose 3.45 points, or 0.36 percent, to 954.58. The Nasdaq Composite Index <.IXIC> added 6.91 points, or 0.36 percent, to 1,916.20 -- a closing high for the year.

The S&P 500 is now up 41 percent from the 12-year closing low of March 9.

Shares of Caterpillar, up 7.8 percent at $39.46, provided the Dow's top boost, but finished below the day's high after the company said it expected the third quarter to be the year's weakest and extremely challenging.

Merck said second-quarter earnings fell, hurt by lower sales of its cholesterol drugs, but income from partnerships and a rebound in sales of asthma drug Singulair helped the drugmaker beat profit forecasts. The stock, up 6.1 percent at $29.65, ranked as the Dow's second-biggest advancer. The pharmaceuticals index <.DRG> was up 1.6 percent.

But shares of United Technologies Corp , a diversified manufacturer, fell 1.8 percent to $53.97 after it posted a 23 percent drop in profit and lowered its 2009 outlook.

On Nasdaq, shares of iPod and iPhone maker Apple Inc were the top drag, falling 0.9 percent to $151.60. The technology bellwether was scheduled to post quarterly results after the bell.

In regulatory news, the U.S. Treasury Department sent to Congress a draft bill that would curb the power of credit ratings agencies.

Moody's Corp shares dropped 6.3 percent to $26.80, and shares of McGraw-Hill Cos , which owns Standard & Poor's, fell 1.5 percent to $32.55.

Also on the defensive were shares of Regions Financial Corp and Comerica Inc , two large U.S. regional banking companies. Both posted second-quarter losses as a deteriorating commercial property market caused bad loans to soar. Regions' stock slid 15.4 percent to $3.42. Comerica's stock lost 10.1 percent to $20.51.

The KBW Bank Index <.BKX> dropped 3.1 percent.

Troubled lender CIT Group Inc warned on Tuesday it could still file for bankruptcy if debt swap failed, one day after securing $3 billion in emergency financing from its bondholders. Its stock sank 21.6 percent to end at 98 cents on the New York Stock Exchange.

(Editing by Jan Paschal)

Ben Bernanke Caterpillar Merck & Co.