U.S. stocks rose on Tuesday after encouraging earnings reports from economic bellwether United Parcel Service and industrial conglomerate Emerson Electric.

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 0.4 percent to $58.64.

The S&P 500 is up for a second straight day after falling 6.2 percent in the last three weeks of January.

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

Cummins stock jumped 7.1 percent to $50.25, and Emerson added 7.8 percent to $45.78. The S&P industrial sector <.GSPI> rose 1.3 percent.

This whole earnings season is all about, 'Is there top-line growth,' and some companies are showing it, said Frank Ingarra, portfolio manager at Hennessy Funds in Stamford, Connecticut.

This will help us going forward because if companies grow their top line, they will hire some more employees to drive sales and orders.

The Dow Jones industrial average <.DJI> gained 70.66 points, or 0.69 percent, to 10,256.19. The Standard & Poor's 500 Index <.SPX> added 7.80 points, or 0.72 percent, to 1,096.99. The Nasdaq Composite Index <.IXIC> was up 5.86 points, or 0.27 percent, to 2,177.06.

On the economic front, pending sales of previously owned U.S. homes edged up as expected in December, which could help calm fears of renewed weakness in the troubled sector.

Homebuilder D.R. Horton Inc jumped 8 percent to $12.84 after posting its first quarterly profit in almost three years, while the Dow Jones home construction index <.DJUSHB> advanced 5.7 percent.

Amazon.com Inc slid for a second straight day, falling nearly 3 percent and weighing down the Nasdaq. Traders feared a pricing battle it lost with publisher Macmillan could hurt sales volume growth for its Kindle e-reader.

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.

JPMorgan Chase & Co , up 1.9 percent to $40.38, was a top boost to the Dow industrials.

If (Volcker) backs off a little bit, or if people gain confidence (the proposal) is not going to be as pointed as it seemed when it was first announced, then maybe that will help the banks, said Peter Boockvar, equity strategist at Miller Tabak & Co in New York.

(Additional reporting by Edward Krudy; editing by Jeffrey Benkoe)