Stocks rose on Tuesday, led by the financial sector, after Treasury Secretary Timothy Geithner said the vast majority of U.S. banks are well capitalized and industrial bellwether United Technologies Corp reported forecast-beating earnings.

Financials were the best-performing sector in the broad S&P 500 index after Geithner said the vast majority of banks have more capital than they need to be considered well capitalized by their regulations.

His comments came one day after fears about the results of government stress tests on the adequacy of banks' capital levels dragged down bank shares. The Obama administration has said results of the stress tests will be released on May 4.

The KBW bank index <.KBX> rose 6.39 percent.

The Nasdaq rose as chipmaker Texas Instruments Inc posted a surprise quarterly profit and Broadcom Corp made a bid to buy storage-equipment maker Emulex Corp .

Shares of United Technologies, the world's largest maker of elevators and air conditioners, rose 5.1 percent to $48.13 and led gains in the Dow industrials after the company beat profit expectations and said although order rates remain down, there are signs of stabilization, especially in China.

Shares of JPMorgan , up 5.4 percent to $31.20, were a top boost to the Dow industrials while the S&P financial sector <.GSPF> rose 4.5 percent.

We're seeing a combination of people wanting to buy into a longer term turn, said Craig Peckham, equity trading strategist at Jefferies & Company in New York. Some pretty constructive commentary coming out of Washington is helping the financials reverse course here.

The Dow Jones industrial average <.DJI> gained 70.88 points, or 0.90 percent, to 7,912.61. The Standard & Poor's 500 Index <.SPX> rose 10.32 points, or 1.24 percent, to 842.71. The Nasdaq Composite Index <.IXIC> added 23.70 points, or 1.47 percent, to 1,631.91.

On the merger front, chipmaker Broadcom Corp said it made an unsolicited bid for Emulex, lifting the Nasdaq.

Broadcom shares slid 7.3 percent to $20.21, while Emulex surged more than 43 percent to $9.46.

Market gains were kept in check as drugmaker Merck & Co Inc reported lower-than expected sales and earnings. [ID:nN21449400]. Its shares fell 5.2 percent to $23.91, making it the top drag on the Dow industrials. The S&P healthcare sector <.GSPA> fell 1.2 percent.

(Editing by Leslie Adler)

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