* IBM falls after earnings fail to impress* Homebuilders up on strong NAHB numbers* Indexes up: Dow 1 pct, S&P 1.3 pct, Nasdaq 0.7 pctBy Angela MoonNEW YORK, Oct 18 (Reuters) - U.S. stocks rose on Tuesday, overcoming what some saw as disappointing earnings from major financial companies, while positive European news became a trigger to rush into the market.All three major indexes started off lower on weak earnings from Goldman Sachs and less-than-stellar results from Bank of America. However, the European Central Bank was believed to be buying Italian bonds, which helped turn around the market.”This market has such momentum when it comes to one direction, and that is because of the lack of liquidity in the market. We are not seeing a lot of volume,” said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York.”So when a real seller or buyer comes in, it moves the market a lot and people follow.”Trading volume continued to be low, with just 4.8 billion shares exchanging hands on the New York Stock Exchange, NYSE Amex and Nasdaq by late afternoon.Volatility also was evident with the CBOE Volatility Index VIX above 30.The Dow Jones industrial average rose 117.99 points, or 1.04 percent, at 11,514.99. The Standard & Poor’s 500 Index was up 15.85 points, or 1.32 percent, at 1,216.71. The Nasdaq Composite Index gained 19.29 points, or 0.74 percent, at 2,634.21.Tuesday’s gains followed the worst loss by the S&P 500 in two weeks on Monday on the heels of the benchmark index’s first two-week rally since July.Corporate earnings were mixed on Tuesday.Bank of America Corp jumped 7.8 percent to $6.50 after it reported a third-quarter profit but showed its main businesses struggled as income from lending and investment banking fell.The KBW bank index advanced 3.7 percent.Goldman Sachs Group Inc also added 2.4 percent to $99.22 after reporting a rare loss.State Street Corp climbed 6.5 percent to $36.06 after its net income rose, lifted by tax benefits and double-digit gains from servicing and investment management fees.The KBW bank index advanced 3.7 percent.But International Business Machines Corp fell 4.5 percent to $178.97 after Big Blue’s earnings beat failed to stem worries about a slowdown in technology spending.U.S. homebuilder stocks were helped by strong homebuilder sentiment data, signaling a recovery in the housing market.Shares of KB Home rose 8.4 percent to $6.82 and Pulte Group Inc was up 11 percent to $4.45.The National Association of Home Builders (NAHB)/Wells Fargo Sentiment Index climbed to 18, the highest level since the expiration of the homebuyer tax credit in 2010, data from the group showed.Moody’s cautioned it may slap a negative outlook on France’s Aaa credit rating in the next three months if costs from helping to bail out banks and other euro zone members stretch its budget too thin.Another negative was data showing China’s growth slowed in the third quarter to its weakest pace since early 2009.