U.S. stocks rose on Tuesday as key housing data provided further evidence the U.S. recession was abating.

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in April, rose 6.7 percent for that month from March, well above economists' average forecast of a 0.5 percent rise, according to a Reuters poll.

Shares of home builders increased after the data, as the Dow Jones U.S. Home Construction index <.DJUSHB> added 1.6 percent and the SPDR S&P Homebuilders ETF gained 2 percent.

This is our third monthly increase, and it really supports the bullish case, said Jim Awad, managing director at Zephyr Management in New York.

It is going to be incredibly good for the markets today, and it looks like what's going to happen is that by the time it's clear we're in a recovery, the stock market will be fully valued.

The Dow Jones industrial average <.DJI> gained 15.83 points, or 0.18 percent, to 8,737.27. The Standard & Poor's 500 Index <.SPX> rose 1.04 points, or 0.11 percent, to 943.91. The Nasdaq Composite Index <.IXIC> added 5.02 points, or 0.27 percent, to 1,833.70.

But declines among financial shares limited gains on Wall Street, after several companies, including Dow components JP Morgan Chase & Co and American Express Co said they will sell new stock as they attempt to raise capital to repay money received under the government's bailout plan.

The equity offerings would be dilutive to shareholders, decreasing their percentage ownership stake in the company.

The market is up, and it seems like a wise time for companies to issue stock and either stabilize their balance sheets or repay TARP, the government's Troubled Asset Relief Program, said Tim Ghriskey Chief investment officer of Solaris Asset Management in Bedford Hills, New York.

Companies generally want to get out from under the finger of the government.

American Express shares slid 4.2 percent to $24.89, while JP Morgan Chase fell 3.6 percent to $34.82 as the top drags on the blue-chip Dow.

U.S. Treasury Secretary Timothy Geithner told CNBC during a visit to Beijing that improving confidence may lessen U.S. banks' interest in government programs designed to reduce toxic assets on their balance sheets.

Pepsi Bottling Group Inc
rose 3 percent to $34.16 after boosting its second-quarter and full-year 2009 earnings outlook, citing improved carbonated soft drink performance in the United States and lower commodity prices.

Walgreen Co said sales at stores open at least a year rose by 1 percent, but missed analysts' expectations, with weaker-than-expected sales at pharmacy counters. However, total sales rose 6.1 percent for the month, sending shares up 1.1 percent to $31.47.

A number of retailers are due to report monthly sales results on Thursday.

(Reporting by Chuck Mikolajczak; additional reporting by Ryan Vlastelica; editing by Jeffrey Benkoe)