NEW YORK (

TheStreet

) -- Stocks finished higher Tuesday, extending a four-day winning streak as Wall Street grew comfortable with expectations that Greece will soon adopt new austerity measures in order to avoid default.

Greece Prime Minister George Papandreou's new government

won a key confidence vote late Tuesday as expected

, clearing a first hurdle to his government pushing through a bill calling for $40.2 billion worth of budget cuts next week. Greece needs to pass the bill to receive its next round of funding from Eurozone countries and the International Monetary Fund.

The

Dow Jones Industrial Average

closed up by 110 points, or 1%, to 12,190. The

S&P 500

finished up by 17 points, or 1.3%, to 1296, and the

Nasdaq

gained 56 points, or 2.1%, to 2686.

Contagion fears eased after

European leaders meeting in Luxembourg on Monday said that the European Union would work to contain Greece's credit crisis. Jean-Claude Juncker, prime minister of Luxembourg, also expressed his belief that Greece would pass the austerity measures needed before receiving the next installment of aid in a €100 billion bailout package.

Existing-home sales data was also a positive for stocks.

Home sales came in marginally better than expected, sliding 3.8% to an annual rate of 4.81 million in May. Economists had expected an annual rate of 4.79 million, according to

Briefing.com

. The annual rate for April was downwardly revised to 5 million from 5.05 million.

Members of the

Federal Reserve's

policy-setting arm gathered Tuesday for the first day of a two-day meeting that will conclude in a rate decision statement on Wednesday afternoon. Wall Street is largely expecting that Chairman Ben Bernanke will announce the end of the second round of quantitative easing and that the Federal Open Market Committee will downwardly revise its growth expectations for the year. The Fed's key interest rate is expected to remain untouched at 0.25%.

Basic materials, energy and technology sectors put in the strongest performance during Tuesday's session. Breadth was overwhelmingly positive within the Dow with 26 of the 30 components moving higher.

Caterpillar

(CAT) - Get Report

,

Alcoa

(AA) - Get Report

and

DuPont

(DD) - Get Report

enjoyed the biggest gains among the blue chips.

Consumer staples and health care stocks showed the mildest gains on Tuesday.

Boeing

(BA) - Get Report

,

Johnson & Johnson

(JNJ) - Get Report

,

Merck

(MRK) - Get Report

, and

Procter & Gamble

(PG) - Get Report

were the Dow's laggards.

Overall market breadth was extremely positive with 89% of the 3.4 billion shares trading on the New York Stock Exchange gaining ground, and only 10% declining. 1.7 billion million shares changed hands on the Nasdaq.

Shares of

Walgreen

(WAG)

fell 4% to $43.28 after the

drugstore chain topped analysts' third-quarter profit estimates by 2 cents but said contract renewal negotiations with pharmacy benefit manager

Express Scripts

(ESRX)

were unsuccessful. Shares of Express Scripts finished up 0.4% at $54.99.

Shares of

Tower Bancorp

(TOBC)

surged 32% to $26.80 on news that it has agreed to be acquired by

Susquehanna Bancshares

(SUSQ)

for $28 a share, or 3.47 shares of Susquehanna stock per Tower share. The deal is valued at $343 million. Susquehanna's stock declined 8% to $7.70.

Drug company

AstraZeneca

(AZN) - Get Report

is reportedly

nearing a deal to sell its Swedish health care and dental unit Astra Tech to dental products company

Dentsply International

(XRAY) - Get Report

in a deal worth about $1.8 billion. AstraZeneca's stock shed 0.2% at $49.17 while shares of Dentsply gained 3% to $37.61.

Shares of

Best Buy

(BBY) - Get Report

gained 3% to $32.38 after the

consumer electronics retailer said its board authorized a new $5 billion share repurchase program and a 7% increase to its quarterly dividend.

Airbus

said it received a commitment from leasing company

CIT Group

(CIT) - Get Report

for

50 of its fuel-efficient A320 aircraft at the Paris Air Show on Tuesday.

Boeing

(BA) - Get Report

, meanwhile, signed a deal for eight 777-300ER jets worth $2.27 billion with

Aeroflot

, and a $1.2 billion deal with

Norwegian Air Shuttle

for 15 Boeing 737-800 planes. Boeing's stock lost 0.7% to $73.98.

BP

(BP) - Get Report

said

Weatherford International

(WFT) - Get Report

would

pay it $75 million to settle potential claims between the companies related to the Gulf of Mexico oil spill in April 2010. Weatherford's shares gained 4% to $17.59 and BP's stock finished up 4% at $43.40.

The

August crude oil contract lost 57 cents to settle at $93.61 a barrel.

Gold for August delivery closed up by 90 cents at $1,547 an ounce.

The benchmark 10-year Treasury fell 7/32, lifting the yield to 2.983%. The euro was gained 0.72% against the dollar as the dollar index weakened by 0.5%.

The FTSE in London gained 1.4%, and the DAX in Frankfurt surged 1.9%. Hong Kong's Hang Seng jumped 1.2%, and Japan's Nikkei advanced 1.1%.

.

-- Written by Chao Deng and Melinda Peer in New York

.