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NEW YORK?(CNNMoney) -- U.S. stocks got an afternoon boost from President Obama Tuesday, when he indicated lawmakers are close to reaching an agreement on raising the debt ceiling.
"The good news is that today a group of senators, the 'Gang of Six,' Democrats and Republicans... put forward a proposal that is broadly consistent with the approach that I've urged," the president said in an afternoon press conference, referring to a proposal considered by the Senate earlier in the day.
The nation is fast approaching a possible default, if lawmakers fail to raise the debt ceiling by the Aug. 2 deadline.
Stocks immediately shot up after Obama's speech, with the Dow Jones industrial average (INDU) rising as much as 207 points, before falling back again slightly. At 2 p.m. ET, the Dow was up 181 points, or 1.5%, with 27 of its 30 components in the black.
"Obama came on television and it seemed like there was significant progress on the debt ceiling," said Phil Streible, senior market strategist with Lind-Waldock. "Suddenly there was a lot optimism. With the way they're running out of gold and silver, investors are running out of safety assets."
Gold -- which had breached a new intra-day high earlier in the session -- immediately plunged. Gold futures for August delivery fell $13.40 to $1,589 an ounce.
Stocks had already advanced earlier in the session, as investors welcomed a strong housing report and solid corporate earnings.
Overall, the S&P 500 (SPX) added 18 points, or 1.4%; and the Nasdaq (COMP) gained 54 points, or nearly 2%.
Before the bell, the Commerce Department reported both housing starts and building permits blew past Wall Street expectations in June.
Shares of homebuilder Lennar (LEN) and competitor DR Horton (DHI, Fortune 500) both rose more than 5%.
Companies: News Corp. (NWSA, Fortune 500) remained in the spotlight, as CEO Rupert Murdoch testified before the British Parliament about a phone-hacking scandal that has shaken the press, police and political establishments.
After plummeting to a six-month low Monday, News Corp. shares rebounded 4.7% Tuesday. (Watch the hearing LIVE).
Meanwhile, investors seemed to shrug off disappointing earnings reports from some of America's largest banks.
Bank of America (BAC, Fortune 500) shares fell 2% after the bank reported a net loss of $8.8 billion, or 90 cents per diluted share, as expected. However, the bank was not expected to report a profit after agreeing to pay an $8.5 billion settlement to investors burned by fraudulent mortgage securities.
Goldman Sachs (GS, Fortune 500) posted second-quarter earnings of $1.1 billion, or $1.85 a share, missing analysts' forecasts. The investment firm reported net revenue of $7.28 billion. Goldman Sachs shares fell 2% after the disappointing report.
Harley Davidson (HOG, Fortune 500) was the biggest gainer in the S&P 500, climbing roughly 10%. The motorcycle maker beat Wall Street forecasts on both earnings and revenue, and raised its shipment forecasts for the year overall.
IBM led the Dow's gains, after the chipmaker reported an 8% year-over-year rise in quarterly income to $3.7 billion late Monday. Excluding one-time charges, earnings per share were $3.09. The positive news bumped IBM (IBM, Fortune 500) shares up 5%.
Citing strong demand, Coca-Cola (KO, Fortune 500) -- another Dow component -- reported earnings per share of $1.20 on revenue of $12.7 billion, beating analyst expectations. Shares of the soft-drink maker were up 3.8%.
Johnson & Johnson (JNJ, Fortune 500) fell 0.7%, after the health products company said its second-quarter income dropped 20% to $2.8 billion -- mostly due to drug recalls. But profit and revenue still beat Wall Street forecasts.
Apple (AAPL, Fortune 500) is scheduled to report its earnings after the closing bell. The iPod, iPad and Mac computer maker is forecast to have earned $5.85 a share. Yahoo! (YHOO, Fortune 500) will also report quarterly results after the close.
Currencies and commodities: The dollar weakened against the euro, the Japanese yen and British pound.
Oil for August delivery gained $1.86 to $97.79 a barrel.
Bonds: The price on the benchmark 10-year U.S. Treasury dropped, pushing the yield up to 2.92% from 2.91% late Monday.
World markets: European stocks closed higher. Britain's FTSE 100 edged higher 0.7%, the DAX in Germany advanced 1.2% and France's CAC 40 added 1.2%.
Asian markets ended mixed. The Shanghai Composite was off 0.7% and Japan's Nikkei lost 0.9%, while the Hang Seng in Hong Kong ticked up 0.5%. 
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