U.S. stocks rose on Tuesday after encouraging earnings reports from United Parcel Service and D.R. Horton and as a rise in pending home sales helped calm fears of weakness in the housing market.

UPS , considered a bellwether because it handles a big chunk of U.S. shipping, reported a drop in fourth-quarter profit, but forecast a sharp increase in 2010 earnings. Its stock rose 1.1 percent to $59.02.

Pending sales of previously owned U.S. homes increased 1 percent, as expected, in December. That helped lift home builders' shares. D.R. Horton , one of the top five U.S. home builders, reported its first quarterly profit in almost three years and its stock jumped 11.1 percent to $13.23.

The S&P 500 is up for a second straight day after falling 6.2 percent in the last three weeks of January. Some analysts say the market is correcting from that fall.

Overall, the earnings have been strong, said Eric Kuby, chief investment officer of North Star Investment Management Corp, in Chicago. Beyond the earnings, there have also been two pretty positive bits of macroeconomic data in the face of all the concern about the economic recovery stalling out.

Kuby said pending home sales as well as Monday's better-than-expected ISM report on manufacturing were reassuring investors.

The Dow Jones industrial average <.DJI> gained 76.55 points, or 0.75 percent, to 10,262.08. The Standard & Poor's 500 Index <.SPX> rose 9.44 points, or 0.87 percent, to 1,098.63. The Nasdaq Composite Index <.IXIC> added 9.20 points, or 0.42 percent, to 2,180.41.

The rally in home builders' stocks, driven by pending home sales and D.R. Horton's results, pushed the Dow Jones U.S. home construction index <.DJUSHB> up 6 percent.

Amazon.com Inc slid for a second straight day, falling 1.9 percent to $116.60 and curbing the Nasdaq's advance. Traders feared a pricing battle it lost with book publisher Macmillan could hurt sales volume growth for its Kindle e-reader.

Exposure to emerging markets helped industrials Cummins Inc and Emerson Electric Co post rosy quarterly earnings.

Cummins' stock gained 7.6 percent to $50.48 and Emerson's shares added 8 percent to $45.86, helping the S&P 500 industrial sector index <.GSPI> rise 1.5 percent. Cummins is a U.S. manufacturer of diesel engines and other power generation equipment. Emerson Electric is an industrial conglomerate whose products include climate control systems, power systems and technology used by the oil and natural gas industries.

Investors will also watch White House adviser Paul Volcker's testimony before a Senate panel. He's expected to urge lawmakers to curb risks taken by large banks, according to testimony obtained by Reuters. His comments could move bank stocks, which tumbled when reports on the proposal broke last month.

The Dow got one of its biggest boosts from JPMorgan Chase & Co , the second-largest U.S. bank, whose stock gained 2 percent to $40.41,

(Reporting by Edward Krudy; Editing by Jan Paschal)

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