NEW YORK (AP) — Strong earnings reports from Home Depot and Macy's helped lift stock indexes in early trading on Wall Street Tuesday. A jump in home sales and consumer confidence also brought buyers back to the market.

The Dow Jones industrial average was up 77 points, or 0.6 percent, at 13,858 as of 10:22 a.m. The Dow fell 216 points the day before, its biggest drop in three months, after closely contested elections in Italy suggested the country might be headed for political gridlock, which could undermine the euro.

Other indexes also rose, but not as much as the Dow. The Standard & Poor's 500 index was up three points, or 0.2 percent, at 1,490. The Nasdaq composite rose one point, or 0.04 percent, to 3,118.

Home Depot, the biggest home improvement store chain in the country, jumped $3.27, or 5 percent, to $67.19 after reporting that its income rose 32 percent in the latest quarter thanks to strong U.S. sales and the cleanup that followed Superstorm Sandy. Macy's results also beat analysts' forecasts, and its stock rose $1.43, or 3.7 percent, to $39.95.

Two strong economic reports also encouraged investors. The government reported that sales of new homes jumped 16 percent last month to the highest level since July 2008, the latest sign that the housing recovery is accelerating. Also, a measure of consumer confidence rose sharply, reversing three months of declines, as shoppers began adjusting to a payroll tax hike last month.

Investors will also be watching testimony by Federal Reserve Chairman Ben Bernanke, who heads to Capitol Hill to explain what the Fed will do to accelerate the economic recovery. Bernanke is sure to face questions about the Fed's bond-buying program, which has been used to keep the economy flush with cash and interest rates low. Stocks fell sharply over two days last week after minutes from the Fed's last policy meeting revealed disagreement among the bank's policymakers over how long to continue the program.

European markets fell as investors worried about Italy's political situation. Results late Monday showed strong gains by a protest campaign led by a former comedian and the camp of former premier Silvio Berlusconi, both of whom oppose belt-tightening measures put forth by the previous government of Mario Monti.

If Italy slows down or abandons its austerity program it could undermine investors' confidence in the country's ability to get its economy going again and revive worries over the viability of the region's shared currency, the euro.

Italy's main stock index dropped 3.8 percent Tuesday. The yield on Italy's benchmark government bond rose sharply, to 4.76 percent from 4.43 percent, as investors sold them. That's still far below the 7 percent the yield traded at in January 2012, when confidence in Italy's finances was far lower. The euro was little changed against the dollar.

Other European indexes also fell, but not as much. Stocks fell 1.6 percent in Germany, 1.8 percent in France, and 1.1 percent in Britain.

In U.S. government bond trading, the yield on the 10-year Treasury note edged up to 1.87 percent from 1.86 percent late Monday.