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Stocks Rebound Sharply; S&P 500, Nasdaq Rise Over 1%


European markets traded higher after upbeat eurozone data and a Markit report showing a return to growth of the U.K. services sector in January.

Gold for April delivery fell $2.90 to settle at $1,673.50 an ounce at the Comex division of the New York Mercantile Exchange, while March crude oil futures added 57 cents to close at $96.74 a barrel.

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The benchmark 10-year Treasury fell 13/32 to raise the yield to 2.005%. The dollar was off 0.03%, according to the U.S. dollar index .

In corporate news, Yum! Brands (YUM) said Monday that fourth-quarter profit fell 5% and warned that it expects earnings for the year to decline amid a controversy over its chicken suppliers in China . Shares dropped 2.9%.

BP(BP) , the energy giant, said fourth-quarter earnings fell 79%, largely because of payouts related to the Gulf of Mexico oil spill . ADRs rose 1.4%.

Kellogg(K) , the cereal maker, posted fourth-quarter earnings of 65 cents a share on revenue of $3.6 billion, versus the average analyst estimate of 66 cents a share on revenue of $3.44 billion amid strength in Latin America. Shares increased 0.7%.

Chinese search company Baidu(BIDU) said Tuesday that profit for the quarter ended Dec. 31 rose 36% as advertising spending increased. Shares plunged 10%.

Expedia(EXPE) , the online travel agency, is expected by analysts Tuesday to post a profit of 65 cents a share in the fourth quarter on revenue of $929.8 million after the bell. Shares tacked on 3.6%.

Zynga(ZNGA) , a Facebook partner, is expected by analysts to post a quarterly loss of 3 cents a share on revenue of $212 million after the market close Tuesday. Shares popped 7% as Bank of America raised its view on Zynga to "buy" from "underperform."

Virgin Media ( VMED) confirmed that it is in discussions with international cable company Liberty Global on a "possible transaction." Shares of Virgin Media surged 18%.

Archer Daniels Midland ( ADM) shares rose 3.3% after the company beat quarterly earnings estimates as it managed to cope with U.S. drought challenges and fully utilized its oilseeds crushing capacity.

J.C. Penney ( JCP) shares added 2.4% following a decline of more than 2.5% after the department store operator moved to file a lawsuit in a Delaware court seeking judgment that it is not in default of certain bonds.

Opexa Therapeutics ( OPXA) shares more than doubled Tuesday after the company struck an agreement with Merck Serono, a division of Germany's Merck, for the development and commercialization of a personalized T-cell therapy treatment for multiple sclerosis patients. Potential payments to Opexa from the option and license agreement could total $225 million.

McGraw-Hill( MHP ) shares tumbled 11% as the company's Standard & Poor's unit is accused by the Justice Department of defrauding investors with optimistic ratings of mortgage-backed securities and derivatives prior to the financial crisis.