By Kate Gibson, MarketWatch

NEW YORK (MarketWatch) -- U.S. stocks rose Tuesday, recouping much of the prior day's slide, as evidence of a solid finish for housing in 2012 and after Ben Bernanke defended the Fed's monetary policy.

Home Depot Inc. ( HD ) shares rallied after the retailer raised its dividend and approved a $17 billion stock buyback.

"The market is bouncing back after yesterday's big decline; the other part of it is we get a bit of a bounce from Bernanke's comments along the lines of continued QE [quantitative easing]," Paul Nolte, managing director at Dearborn Partners in Chicago, said of the Federal Reserve chairman's testimony on Capitol Hill.

After losing 216.40 points in Monday's session, the Dow Jones Industrial Average (DJI) on Tuesday tallied its second triple-digit rise in three sessions, adding 115.96 points, or 0.8%, to 13,900.13.

"We'll take it as a plus, certainly from the real-estate side, and also what we heard from some of the retailers," said Nolte of economic reports and quarterly results from Home Depot Inc. ( HD ) and Macy's Inc. ( M ).

Twenty-three of the Dow's 30 components were in the green, led by shares of Home Depot after the home-improvement retailer beat profit expectations.

The S&P 500 index (SPX) climbed 9.09 points, or 0.6%, to 1,496.94, with materials and consumer discretionary leading gains that included all 10 of its major sectors.

The Nasdaq Composite (RIXF) gained 13.40 points, or 0.4%, at 3,129.64, with shares of Apple Inc. ( AAPL ) up 1.4%. .

For every stock that fell, roughly two rose on the New York Stock Exchange, where 772 million shares traded.

On the New York Mercantile Exchange, gold futures (GCJ3) rose $28.90, or 1.8%, to settle at $1,615.50 an ounce, while crude-oil futures (CLJ3) shed 48 cents, or 0.5%, to $92.63 a barrel. Read more on and

Bernanke Q&A scares bulls

Stocks had erased most of their gains as Bernanke took questions from lawmakers, with the Fed chief warning automatic federal budget reductions slated to start Friday would impose a "significant" burden on the U.S. economy if politicians are unable to reach a deal to avoid the cuts.

Bernanke's prepared testimony on Capitol Hill had him reiterating his view that the benefits of the central bank's easing policy outweigh any costs.

Economic reports showed the value of U.S. homes rising in the final month of last year. The Federal Housing Finance Agency reported home prices rose 0.6% and the S&P/Case-Shiller home-price index climbed 0.2% in December.

Commerce Department figures showed new-home sales rising 15.6% last month to an annual rate of 437,000, the highest mark since July 2008.

And, the Conference Board said its index of consumer confidence climbed to 69.6 this month, exceeding estimates of 62.3, with the data suggesting that "consumers are weathering the recent storm of higher payroll taxes and rising gas prices reasonably well," said Jim Baird, chief investment strategist for Plante Moran Financial Advisors.

"Since most people have their wealth tied up in their home, rising home prices make consumers more confident, more creditworthy and more willing to spend acquired income," Dan Greenhaus, chief global strategist at BTIG LLC, noted in an email.

"Ultimately that has important effects on economic output, one reason that home-price fluctuations are watched so closely," Greenhaus added.

Benchmark stock indexes sank Monday as national elections in Italy yielded uncertain results, with the CBOE Volatility Index jumping 34% in a display of investor uncertainty.

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