U.S. stocks soared on upbeat earnings from big banks and a report that Germany and France will endorse a gigantic bailout package for the Eurozone.

The S&P 500 Index closed up 24.52 points, or 2.04 percent, to end at 1,225.38.  The Dow Jones Industrial Average rallied 180.05 points, or 1.58 percent, to end at 11,577.05.  The Nasdaq Composite rose 1.63 percent.

By late morning session, U.S. stock indices were slightly positive on upbeat earnings from Bank of America (NYSE:BAC), which beat expectations, and Goldman Sachs (NYSE:GS), which reported a loss and missed expectations.

Both earnings reports were also clouded by accounting distortions. 

However, the market, which had already priced in extreme pessimism on these two banks, judged the reports to be positive.

By Tuesday's closing, Bank of America had surged 10.12 percent and Goldman Sachs had jumped 5.52 percent.

Late in the session, U.S. stocks and other risk assets received a boost from a Guardian report that Germany and France have agreed to expand the Eurozone bailout fund from 440 billion euros to 2 trillion euros, citing EU diplomats.

These two core Eurozone members will then endorse the bailout plan at the upcoming weekend Eurozone summit, reported the paper.

Dow Jones, however, said the 2 trillion euros report is totally wrong, citing an anonymous official.

Nevertheless, U.S. stocks made a noticeable jump upon the publication of Guardian's report.