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NEW YORK (

TheStreet

) -- Stocks finished firmly in the positive territory Tuesday, led by better-than-expected earnings from

Johnson & Johnson

(JNJ) - Get Johnson & Johnson Report

and a rebound in March housing starts.

The

Dow Jones Industrial Average

gained 65 points, or 0.5%, to close at 12,266, after trading as high as 12,275 and as low as 12,200 earlier in the session. The

S&P 500

finished higher by nearly 8 points, or 0.5%, at 1312, while the

Nasdaq Composite

rose by nearly 10 points, or 0.3%, to close at 2745.

"So far, earnings have been pretty good, and that's what helped stabilize the market today. The market is trying to recover after yesterday's losses," said Peter Cardillo, chief market economist at Avalon Partners.

On Monday, stocks lost 1% after ratings agency Standard & Poor's lowered its outlook on AAA-rated U.S. debt because of concerns about Washington's ability to address its mounting debt.

Dow component Johnson and Johnson was the Dow's top performer on Tuesday, after it easily topped expectations with earnings of $1.35 a share on sales of $16.17 billion; analysts expected earnings of $1.26 on sales of $15.87 billion.

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The company also raised its full-year earnings guidance to between $4.90 and $5 a share, which exceeded Wall Street's forecast for earnings of $4.84 a share. The stock surged 3.7% to $62.64.

Alcoa

(AA) - Get Alcoa Corporation Report

,

Caterpillar

(CAT) - Get Caterpillar Inc. Report

and

DuPont

(DD) - Get DuPont de Nemours, Inc. Report

were other prominent gainers.

Bank of America

(BAC) - Get Bank of America Corp Report

, which has fallen in five straight sessions, among the biggest laggards on the Dow along with

Travelers

(TRV) - Get Travelers Companies, Inc. Report

and

Cisco

(CSCO) - Get Cisco Systems, Inc. Report

Shares of

Goldman Sachs

(GS) - Get Goldman Sachs Group, Inc. Report

shed 1.4% to $151.64, surrendering early gains after the

bank reported a first-quarter profit of $1.56 a share and revenue of $11.89 billion. The results beat analysts' projections for earnings of 82 cents a share on revenue of $10.22 billion but the stock

sold off nonetheless

.

Rochdale Securities banking analyst

Richard Bove downgraded Goldman to neutral, citing a weaker economic outlook and regulatory challenges.

After the closing bell,

IBM

(IBM) - Get International Business Machines Corporation Report

reported an adjusted earnings per share of $2.41 on revenues of $24.6 billion. Analysts were expecting an earnings per share of $2.30 on @24.02 billion. IBM also raised its 2011 EPS forecast to $13.15. Shares were gaining 2.4% in extended trading.

Intel

(INTC) - Get Intel Corporation Report

also managed a strong earnings beat, reporting profits of 59 cents per share on revenues of $12.9 billion. Analysts expected profits of 46 cents per share. Its second quarter profit of 32 cents to 35 cents per share was also well ahead of estimates of 28 cents. Shares shot up more than 5% in extended trading.

Yahoo!

(YHOO)

meanwhile beat analyst estimates by a penny, reporting a profit of 16 cents per share on revenues of $1.06 billion.

Market breadth was positive with 64% of the stocks traded on the New York Stock Exchange advancing, while 34% declined.

In other earnings news,

Harley-Davidson

(HOG) - Get Harley-Davidson, Inc. Report

saw its stock drop 5.3% to $37.61 after the

motorcycle company missed Wall's Street's profit expectations by 2 cents with first-quarter earnings of 51 cents a share.

Shares of

Zions Bancorp

(ZION) - Get Zions Bancorporation, N.A. Report

rose 3.8% to $23.85 after posting a surprise first-quarter profit late Monday.

The bank reported earnings of 8 cents a share, compared with the loss of 18 cents a share that analysts had forecast .

Shares of

Comerica

(CMA) - Get Comerica Incorporated Report

and

U.S. Bancorp

(USB) - Get U.S. Bancorp Report

shed 2.1% and 1.2% respectively despite beating expectations. Both banks reported improvement in credit quality, but investors were disappointed in the lackluster trends in loan growth.

In commodity markets,

gold prices finished modestly higher after briefly hitting the psychological mark of $1,500 an ounce. Prices on the safe haven metal gained strength after the S&P's cut outlook on U.S. debt triggered uncertainty. The June gold contract gained $2.2 to settle at $1,495.80 an ounce.

"Gold trading at near $1,500/oz comes as no surprise following yesterday’s news on the S&P downgrade of its outlook for US government debt," Imaru Casanova, equity research analyst at MLV Securities said in an email. "This is exactly the way gold prices should react when there is increased risk and investors are looking for a safe haven in the form of hard assets."

Casanova continued: "I believe fundamentals are supportive of these and higher levels in the long-term, but volatility will prevail both because of the market's perception that these record levels may not be sustained and because of the profit taking that typically follows periods of peak prices."”

Oil prices were also making marginal movements with the June crude contract rising 59 cents to settle at $108.28 a barrel.

The benchmark 10-year Treasury rose 4/32, diluting the yield to 3.367%. The dollar weakened against a basket of currencies with the dollar index down by 0.5%.

.

Overseas, Hong Kong's Hang Seng declined 1.3% and Japan's Nikkei lost 1.2%. London's FTSE gained 0.4% and the DAX in Frankfurt added 0.04%.

--Written by Melinda Peer and Shanthi Bharatwaj in New York

.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.