Stocks stormed higher Tuesday after promising signals about the profitability of U.S. companies and a strong debt auction by Spain. The Dow Jones industrial average rose for the fourth day in five and posted its biggest gain in a month.

European stocks had their best day in four months after Spain, the latest flashpoint in the European debt crisis, attracted strong investor interest at an auction of two-year debt.

Spain's borrowing costs fell, as measured by the yields on Spanish bonds being traded in the market. In recent days, those yields had risen closer to levels that might force Spain to seek an international bailout.

"There's no doubt that gave the market a second wind," Anthony Chan, chief economist with J.P. Morgan Private Wealth management, said of the debt auction. "The market is reassessing and feeling a little better."

The Dow Jones industrial average closed up 194.13 points, or 1.5 percent, at 13,115.54. It was up as much as 210 points Tuesday afternoon. The Dow has had only one 200-point rise this year, a gain of 218 points on March 13.

First-quarter results have begun to pour in from companies, and traders have been impressed so far. On Tuesday, Coca-Cola said its first-quarter profit was better than Wall Street analysts had forecast. Goldman Sachs and Johnson & Johnson also posted strong results.

"This earnings season, expectations were low, and it's going to be easy to beat that," said Doreen Mogavero, a floor broker at the New York Stock Exchange and founder and CEO of Mogavero Lee & Co. Inc., a small brokerage of stocks for institutional clients.

After nine straight quarters of growth, earnings for companies in the S&P 500 index were expected to be roughly flat for the first quarter. The slowdown was expected because of global threats from Europe and China and the difficulty of beating double-digit gains in recent quarters.

"They talked earnings down for three weeks ahead of the announcements," agreed Kenneth Polcari, a floor broker and managing director with the giant brokerage ICAP Equities. "They've lowered the bar so much that when the announcements come in, it's like, 'Look how good everyone is doing,'" he said.

While stocks have not returned to the lurching moves of last summer, the market has been more volatile in April than it was in January, February and March.

In the first quarter, while stocks rose smoothly, there were only six days on which the Dow rose or fell by 100 points. There have been six more in just 11 trading days in April.

Traders said the market is growing more volatile in part because the number of shares traded remains relatively low. About 3.44 billion shares of NYSE-listed stocks were traded on Monday.

"There's so little volume these days that some movement in any direction is going to be exaggerated by not as many people trading as you'd like to see," said Michael Guli, director of Knight Capital Americas, an international financial services company.

Indexes move more sharply when volumes are low because the action is driven by a handful of short-term traders, rather than by big movements of money managed by institutional asset managers, Polcari said.

"If you had real asset managers playing, you'd see volume exploding, and you're not seeing it. The lack of participation by big asset managers is letting the day traders and high-frequency trading guys drive the market and create the volatility," he said.

Conflicting information about the U.S. economy and Europe's debt crisis adds to the volatility, Policari added. "Just as the market is up 20 points today, you could just as easily see it down by 20 points tomorrow," he said, referring to movements in the Standard & Poor's 500 index.

The S&P 500 gained 21.21 points, or 1.6 percent, to 1,390.78. All 10 of its industry groups rose — nine of them by more than 1 percent.

Utilities rose only 0.6 percent. Those stocks offer modest, stable returns in periods of weak growth but tend to suffer when the economy rebounds.

Coke stock leapt 2.1 percent. Traders did not appear as impressed by Goldman Sachs and Johnson & Johnson. J&J edged higher, while Goldman fell three-fourths of a percent.

Chan warned against judging the quarter based on the small number of companies that have reported at this early stage.

The Nasdaq composite index soared 54.42 points, or 1.8 percent, to 3,042.82. Apple, the most valuable company by market value, rose 5.1 percent after five straight days of losses that wiped out about $60 billion in market value.

In Spain early Tuesday, the government sold more than €3.2 billion ($4.2 billion) in short-term debt, more than had been expected. The yield on Spain's 10-year government bond fell to 5.88 percent from 6.10 percent early Monday, a sign of improving confidence in the country's finances.

The cost of insuring Spanish debt against default fell back from a record high, another sign that the auction reassured bond investors. The cost of insuring €10 million in Spanish debt for five years had soared to €522,000 per year on Monday. After Tuesday's auction, it fell to €489,000.

Italy's benchmark stock index rose 3.7 percent. France's and Germany's gained 2.7 percent. The broad STOXX 50 index of European shares rose 2 percent, the most since November.

In the United States, the rally followed a batch of mixed economic news. The number of permits requested by homebuilders for future projects reached a 3½-year high, an indication that the housing market might stop weighing down the economy. But builders broke ground on homes at a slower pace in March.

Factory output fell after four strong months of gains.

Among the other companies that reported earnings:

— Forest Laboratories Inc. rose 4 percent after it weathered competition from generic drug makers better than analysts had expected.

— Regional bank Comerica Inc. gained 3.5 percent after improving credit conditions limited its loan losses and allowed it to increase lending.