Crude oil climbed to a record near $123 a barrel on the New York Mercantile Exchange as traders, who have nearly doubled the price of oil over the past year, reacted to the weakening U.S. dollar, supply threats, and a note from Goldman Sachs & Co. predicting that oil could reach $200 a barrel. High oil prices threaten to crimp consumers' discretionary spending.

But oil price sticker-shock waned and as investors looked past wider-than-expected quarterly losses at Swiss bank UBS, government-sponsored mortgage company Fannie Mae, and homebuilder D.R. Horton Inc.

"I think overall, the strength in stocks right now is on fairly firm footing," said JPMorgan equities analyst Thomas J. Lee. "In some ways, first-quarter earnings are yesterday's news."

In recent weeks, stronger-than-expected results from companies outside the battered financial and housing sectors helped the stock market rebound to levels not seen since early January. Economic data has been better than expected - particularly Friday's employment report and Monday's data on the service sector - and meanwhile, the credit markets keep showing increased appetite for the risk that investors had avoided for months.

The Dow Jones industrial average rose 51.29, or 0.40 percent, to 13,020.83.

Broader stock indicators also rebounded. The Standard & Poor's 500 index rose 10.77, or 0.77 percent, to 1,418.26, and the Nasdaq composite index rose 19.19, or 0.78 percent, to 2,483.31.

Bond prices pared earlier gains. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was at 3.92 percent late Tuesday, down from 3.87 percent on Monday.

Oil settled up $1.87 at $121.84. Gold climbed, while the dollar fell against most other major global currencies.

Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, said it is a good sign that stock traders started buying back in again when the S&P 500 briefly dipped below the technically significant 1,400 mark.

"We had some negative news this morning, and we've shaken it off. It's encouraging," Detrick said.

Huge quarterly losses from three major players in the financial and homebuilding industries initially sparked some stock selling Tuesday, but those dips were soon met by bargain-hunters betting that those sectors are a good buy right now given their low prices.

Fannie Mae reported a larger-than-expected first-quarter loss of $2.2 billion, and said it plans to lower its dividend and raise $6 billion in additional capital. But it also estimated its market share increased to about 50 percent of the new single-family mortgage related securities issued. Fannie Mae shares rebounded to rise $2.52, or 8.9 percent, to $30.81.

Homebuilder D.R. Horton reported a quarterly loss of $1.3 billion and halved its dividend to 7.5 cents a share. The homebuilder's shares rose 88 cents, or 5.1 percent, to $16.85.

UBS reported a loss of nearly $11 billion and said it is reducing its work force by about 7 percent. UBS shares dipped 54 cents to $33.77.

Meanwhile, Wachovia Corp. said it is nearly doubling its previously reported loss for the first quarter to $708 million after reviewing its portfolio of bank-owned life insurance. Wachovia's stock rose 30 cents to $30.08.

After the closing bell, Walt Disney Co. posted a higher second-quarter profit on stronger-than-expected theme park attendance. Shares closed up 44 cents at $33.73 in the regular session, and moved higher in later electronic trading.

Cisco Systems Inc. said third-quarter profit declined, but the networking gear maker's adjusted earnings and revenue topped Wall Street projections. Shares rose 5 cents to close at $26.33 in the regular session, then tacked on another 2 percent in after-hours trading.

The Russell 2000 index of smaller companies rose 5.44, or 0.75 percent, to 729.79.

Advancing issues outnumbered decliners by about 8 to 7 on the New York Stock Exchange, where consolidated volume amounted to 3.77 billion shares, up from 3.30 billion on Monday.

Overseas, Japan's stock market was closed for a holiday. In Europe, Britain's FTSE index finished flat, Germany's DAX index fell 0.50 percent, and France's CAC-40 fell 0.44 percent.

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