Stocks surge in early going

Wall Street aims higher as investors welcome Lehman and Goldman earnings, and gear up for the Fed.

NEW YORK (CNNMoney.com) -- Stocks rose at the open Tuesday as investors welcomed better-than-expected earnings from Goldman Sachs and Lehman Brothers and geared up for an expected interest rate cut from the Federal Reserve later in the day.

The Dow Jones industrial average added over 200 points or 1.7% at the open. The Nasdaq composite index gained 1.9%. The Standard & Poor's 500 index rose 2.2%.

Stocks were mostly lower Monday after Bear Stearns (BSC, Fortune 500)' fire sale to JP Morgan chase (JPM, Fortune 500). However, falling commodity prices and anticipation about the Fed helped stocks close off the lows.

In the news Tuesday:

Lehman Brothers. Shares of the brokerage surged 20% after it reported weaker quarterly sales and earnings that beat estimates, despite taking $1.8 billion in writedowns for bad mortgage bets. Lehman also sought to reassure investors that it was not in danger of seeing a fate similar to that of Bear Stearns, saying that it has maintained a strong liquidity position. Stock (LEH, Fortune 500)

Goldman Sachs. The Wall Street firm managed to report another quarter of better-than-expected sales and earnings, despite the ongoing market turmoil, although results were sharply lower versus a year ago. Shares gained 9% at the open. Stock (GS, Fortune 500)

Federal Reserve. Central bankers meeting Tuesday are expected to cut the fed funds rate, a key overnight bank lending rate, by as much as a full percentage point, with an announcement expected at 2:15 p.m. ET. The Fed has already cut the fed funds rate by 225 basis points since September as a means of shoring up the struggling economy and unfreezing the blocked up credit markets. There are 100 basis points in one percentage point.

Housing. New home construction fell in February to just over a million properties, beating forecasts for a bigger drop. Building permits, a measure of builder confidence, tumbled more than expected.

Inflation. The Producer Price Index (PPI), which measures inflation at the wholesale level, rose as expected in February. But core PPI, which excludes volatile food and energy prices, rose more than expected.