Stock bounce after breakdown

NEW YORK (CNNMoney.com) -- Stocks rallied early Tuesday, with the Dow and S&P 500 bouncing after ending the previous session at nearly 12-year lows.

Fed chairman Ben Bernanke's congressional testimony and President Obama's speech to the nation will be in focus.

The Dow Jones industrial average (INDU) gained 70 points, or 1%, after ending the previous session at the lowest point since May 7, 1997.

The S&P 500 (SPX) index gained 9 points, or 1.3%, after ending the previous session at the lowest point since April 11, 1997.

The Nasdaq composite (COMP) added 22 points, or 1.6%. The tech-fueled index ended the previous session at a 3-month low, with the Nasdaq holding up better than the broader market this year.

Art Hogan, chief market strategist at Jefferies & Co., warned that any gain in could end up being a "dead cat bounce" - a temporary gain that fails to hold.

Given the weakness expected from financial reports such as consumer confidence, Hogan said the economy could really use some positive rhetoric, which he hopes to hear in Obama's speech.

"I think the president has had to sell the stimulus package by talking about how bad things are," said Hogan. "He's gotten into a negative loop, but he has a great opportunity to break that."

On Monday, stocks tumbled, with the Dow and S&P ending at their lowest levels since 1997. Concerns about the economy - particularly the banking, auto and tech sectors - led investors to continue their selling spree.

Global markets were sharply lower Tuesday. Asian markets ended down, with Tokyo's Nikkei index off by 1.5%. European stocks retreated in afternoon trading.

Economy: The S&P/Case-Shiller Home Price Index fell at an 18.2% rate of decline in the fourth quarter, versus a year earlier. This is a record decline in the index's 21-year history.

"The broad downturn in the residential real estate market continues," said David Blitzer, chairman of the index committee at S&P, in a press release. "There are very few, if any, pockets of turnaround that one can see in the data."

Federal Reserve Chairman Ben Bernanke's testimony before the Senate Banking Committee will be the major focus of investors. Bernanke is expected to weigh in on the severity of the current recession and when a recovery will start. He'll also confront questions about the nation's banks.

The testimony is scheduled to begin at 10 a.m. ET.

In the evening, President Obama addresses both houses of Congress, with the economy being the major topic. He will laud legislators for passing the $787 billion stimulus plan, exhort them on legislation aimed at fixing the housing crisis, and talk about cutting the deficit in half by the end of his current term. The speech is slated to start at 9 p.m. ET.

After the open, the Conference Board issues its Consumer Confidence Index for February. It is expected to have fallen to 36 from 37.7 in January. That reading would be the lowest since the Conference Board began tracking the index in 1967.

Company news: Home Depot (HD, Fortune 500) reported a loss of 3 cents per share for the fourth quarter, and a 17% decline in revenue to $14.6 billion. The company has been directly impacted by the nationwide real estate crash.

JPMorgan Chase (JPM, Fortune 500), battered but still thought to be in more solid shape that other money center banks, said late Monday it would slash its dividend by 87% to 5 cents a share.

News Corp. (NWS, Fortune 500) announced that company president Peter Chernin will leave the company later this year.

Oil and money: Oil prices rose 64 cents to $39.07 a barrel on the New York Mercantile Exchange. The dollar was up against the yen and lower versus the euro and the British pound.