Stocks jumped on Tuesday after a pullback in oil prices and an upbeat profit forecast from Bank of America, but technical signals still suggested a market correction was near.

The S&P 500 closed on Monday below a trend line it had held for more than six months that connected lows in late August and late November, suggesting momentum was waning.

In the financial sector, Bank of America Corp , shot up 4.3 percent to $14.64 after it forecast pretax profit of about $40 billion annually longer term, more than some investors had expected. Financials led gainers on the S&P 500, with the S&P financial index <.GSPF> up 2.2 percent.

The Dow Jones industrial average <.DJI> jumped 137.67 points, or 1.14 percent, at 12,227.70. The Standard & Poor's 500 Index <.SPX> was up 13.46 points, or 1.03 percent, at 1,323.59. The Nasdaq Composite Index <.IXIC> put on 27.37 points, or 1.00 percent, at 2,773.00.

Oil prices pulled back, with Brent crude down nearly 2 percent at $112.82 a barrel after Kuwait's oil minister said OPEC was in discussions to increase production for the first time in two years.

Turmoil in Libya has driven up oil prices sharply in recent weeks. On Tuesday, Libyan warplanes struck at rebel forces, stepping up government efforts to roll back early gains in the revolt against Muammar Gaddafi.

Stocks have been closely tied to oil prices recently, as investors worried that consumer spending may be curtailed by higher oil and gas prices, choking off an economic recovery.

The story is going to be oil for a while here, said Hank Smith, chief investment officer at Haverford Trust Co in Philadelphia.

Despite Tuesday's gains, the market is due for, at a minimum, a pullback, if not a correction, having gone up so much, he said.

The S&P has advanced about 25 percent since a rally started in September.

Smith said his firm was overweight on the energy sector, which has helped to offset some of the market decline following the Libyan unrest.

Among decliners, McDonald's Corp dropped 1.3 percent to $75.31 after the fast-food chain said global same-store sales rose 3.9 percent in February, but U.S. sales were weaker than in other regions.

(Additional reporting by Rodrigo Campos; editing by Jeffrey Benkoe)