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The markets changed direction again, this time heading back into the green, as traders mulled a bounty of earnings and economic data as well as Fed Chairman Bernanke's testimony.

Today's Markets

As of 2:10 p.m. ET, the Dow Jones Industrial Average climbed 87.9 points, or 0.69%, to12815, the S&P 500 gained 9.9 points, or 0.73%, to 1363 and the Nasdaq Composite rose 14.8 points, or 0.51%, to 2912.

Tuesday is set to be a busy day, with a slew of corporate and economic reports on tap. Federal Reserve Chairman Ben Bernanke gave his Semiannual Monetary Policy Report before the Senate Banking Committee on the day.

He provided a gloomy economic outlook, discussing the slowing pace of job and economic growth, with headwinds from Europe, according to his prepared remarks. However, he came short of suggesting the Fed will imminently take on any additional monetary easing, saying the Fed: "made clear at its June meeting that it is prepared to take further action as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability."

The central bank recently embarked on the second round of "Operation Twist," a program designed to lengthen the maturity of its balance sheet without adding to it.

The Fed has repeatedly pointed to the treacherous situation in Europe as a key downside risk to the U.S. economy. And indeed, global trading desks were confronted with a round of glum data on the day. A closely-watched report from the ZEW Center for European Economic Research showed investor confidence fell for the third month in a row in Germany to the lowest level since January.

The markets also got fresh data on U.S. consumer prices and industrial production. Prices at the consumer level remained unchanged in June from May, according to the Labor Department. Excluding the food and energy segments, so-called "core prices" were up 0.2%. Both readings were in line with expectations.

"Falling headline inflation is not yet a deflation risk scenario, but certainly poses no roadblock to the Federal Reserve when weighing the necessity for more monetary easing," analysts at Nomura wrote in a note to clients.

The Fed has to carefully consider potential inflationary pressures generated by monetary policies. Generally, economists say, expansionary monetary policies come at the risk of stoking inflation.

Meanwhile, industrial production, which is a broad indicator of activity in the industrial sector, revved up by 0.4% on a month-to-month basis in June, according to the Federal Reserve. Economists were looking for a slightly smaller increase of 0.3%.

Earnings Deluge

Earnings season is also swinging into full gear.

Goldman Sachs (NYSE:GS) posted second-quarter earnings of $1.78 a share, which came in better than expectations of $1.16. The investment banking giant revealed net revenues of $6.63 billion, also better than the $6.28 billion analysts expected.

Coca-Cola (NYSE:KO) unveiled a second-quarter comparable EPS of $1.22, topping estimates of $1.19. The world’s biggest beverage maker posted operating revenues of $13.09 billion, higher than the $12.98 billion Wall Street expected.

Johnson & Johnson (NYSE:JNJ) posted an adjusted second-quarter profit of $1.30 a share on sales of $16.5 billion. Wall Street expected the consumer health company to earn $1.29 on $16.69 billion. The Dow component lowered its full-year guidance to $5 to $5.07 a share, weaker than the consensus estimate of $5.14.

Then, after the close, traders will get reports from Intel (NASDAQ:INTC), CSX (NYSE:CSX) and Yahoo (NASDAQ:YHOO).

Crude oil prices have been climbing amid tension in the Middle East. The benchmark contract traded in New York rose 25 cents, or 0.28%, to $88.68 a barrel. Wholesale New York Harbor gasoline jumped 1% to $2.885 a gallon.

In metals, gold fell 40 cents, or 0.02%, to $1,591 a troy ounce.

Foreign Markets

The Euro Stoxx 50 fell 0.05% to 2251, the English FTSE 100 dipped 0.59% to 5629 and the German DAX gained 0.18% to 6578.

In Asia, the Japanese Nikkei 225 edged higher by 0.35% to 8755 and the Chinese Hang Seng rallied 1.8% to 19455.