U.S. stocks rose on Tuesday as investors shifted focus to strong earnings and manufacturing data and less on the turmoil in the Middle East.

The S&P and the Nasdaq rose more than 1 percent after data showed the U.S. manufacturing sector expanded at its fastest pace in seven years.

Pfizer Inc shares rose 5.1 percent to $19.15 after the Dow component's income and revenue topped estimates. The drugmaker also announced a new share-repurchase program of up to $5 billion of its common stock.

Despite recent headlines (about Egypt), the market's run extended to five months in January, with the S&P 500 up 2 percent on robust incoming data, said Jonathan Golub, strategist at UBS in New York.

While skeptics might attribute the recent ascent in stock prices to animal spirits, we believe that fundamentals are the real story behind the market's success.

The Dow Jones industrial average was up 96.20 points, or 0.81 percent, at 11,988.13. The Standard & Poor's 500 Index rose 15.73 points, or 1.22 percent, at 1,301.85. The Nasdaq Composite Index gained 38.14 points, or 1.41 percent, at 2,738.22.

Trading volume was about 2.5 billion shares by early morning, with advancing stocks beating the decliners by a ratio of about 4 to 1.

More than 200,000 Egyptians poured into central Cairo in the biggest demonstration so far against President Hosni Mubarak's authoritarian rule.

But investors seemed less jittery over the event. Oil prices that have been rallying in the past couple of days on fears of disruption in production in the Middle East fell 0.5 percent to $91.72 a barrel.

The CBOE Volatility index, Wall Street's so-called fear gauge, fell for a second day, down more than 10 percent at 17.53.

United Parcel Service Inc rose 3.9 percent to $74.43 after profit at the world's largest package delivery group beat estimates and it forecast record-high earnings in 2011.

Supporting the Nasdaq, Baidu shares gained 8.2 percent to $117.48 after the company beat fourth-quarter estimates and painted a bright near-term outlook.

(Reporting by Angela Moon, Editing by Kenneth Barry)