Stocks rallied sharply Tuesday despite disappointing results from Apple (NASDAQ: AAPL), Texas Instruments (NYSE: TXN) and SanDisk (NASDAQ: SNDK), as falling oil prices and signs of stability in the financial sector raised hopes that the worst of the year-long credit market crisis may be over.

Even earnings misses from American Express (NYSE: AXP) and Merck (NYSE: MRK) couldn't stop buyers, as investors were inspired by comments from Wachovia (NYSE: WB) that the company has no plans to raise money through a stock sale and cautiously optimistic comments on the financial sector from a Deutsche Bank analyst.

Wednesday will be another test for financial markets, however. After Tuesday's close, Yahoo (NASDAQ: YHOO) missed estimates, VMware (NYSE: VMW) lowered guidance for the second time this month, and Washington Mutual (NYSE: WM) posted a huge loss but said it sees delinquencies stabilizing.

Tuesday's trading session was a study in contrasts, as the major indexes rose more than 1% despite losses of 7% or more in American Express, Merck, Texas Instruments and SanDisk. The Philadelphia Semiconductor Index (PHI: SOX) lost 4.5%, led by TI's 14% loss and SanDisk's 24% drop.

Apple managed to finish more than 10% off its lows on a disappointing forecast, ending the day down 2.6%.

Foundry Networks (NASDAQ: FDRY) soared 32% on news that Brocade (NASDAQ: BRCD) plans to buy the networking company. Brocade shares tumbled 22%.

Photronics (NASDAQ: PLAB) lost 18% on the resignation of its CEO.

Vodafone (NYSE: VOD) fell 14% on its outlook, while QLogic (NASDAQ: QLGC) continued its run on more good earnings news, up 9%.

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The Nasdaq rose 24 to 2303, the S&P gained 17 to 1277, and the Dow surged 135 to 11,602. Volume rose to 5.92 billion shares on the NYSE, and 2.61 billion on the Nasdaq. Advancers led by a 23-10 margin on the NYSE, and 19-9 on the Nasdaq. Upside volume was 68% on the NYSE, and 60% on the Nasdaq. New highs-new lows were 36-112 on the NYSE, and 68-106 on the Nasdaq.