Stocks climbed higher Tuesday as investors welcomed strong earnings from financial services companies, upbeat economic data and some reassuring news from the Federal Reserve.

The Fed's decision to raise short-term interest rates by another quarter-percentage point to 1.75 percent did not come as a surprise to the market. The widely anticipated decision and the statement issued with it were viewed as signals that the central bank sees continued improvements in the economic outlook and inflation.

"I doubt that this hike, which was widely expected, will have any meaningful impact on the economy," said Sung Won Sohn, chief economist at Wells Fargo in Minneapolis, "but it will have a positive psychological effect on the market because it is reassuring the world that the economy is doing better."

The Dow Jones industrial average rose 40.04, or 0.4 percent, to 10,244.93. The Standard & Poor's 500-stock index gained 7.10, or 0.6 percent, to 1129.30. The Nasdaq composite index gained 13.11, or 0.7 percent, to 1921.18.

In economic news, the Commerce Department reported robust housing construction in August. The 2 million-unit pace of housing construction was the highest level of activity in five months. The upbeat economic data reinforced Fed Chairman Alan Greenspan's view that the economy is on firmer footing since striking a soft patch in the late spring.

Lehman Brothers rose 4.9 percent, or $3.73, to $79.75, after the financial services firm beat expectations with a 5.2 percent rise in third-quarter profit. Revenue improved 12 percent. Goldman Sachs gained $3.22, to $94.90, after posting a 30 percent jump in profit for the latest quarter, helped by strong growth across its segments.

Among decliners, General Mills fell 98 cents, to $45.35, after the cereal maker reported a 19 percent drop in earnings because of higher prices for ingredients and restructuring costs.

Adobe Systems gained 5.2 percent, or $2.50, to $50.45 -- a new 52-week high -- after the maker of Photoshop and Pagemaker software reported better-than-expected profit and predicted similar results for the fourth quarter.

Other Indicators

* The New York Stock Exchange composite index rose 67.32, to 6633.22; the American Stock Exchange index rose 18.40, to 1262.33; and the Russell 2000 index of smaller-company stocks rose 6.18, to 576.92.

* Advancing issues outnumbered declining ones by 7 to 3 on the NYSE, where trading volume rose to 1.31 billion shares, from 1.19 billion on Monday. On the Nasdaq Stock Market, advancers outnumbered decliners by 34 to 1 and volume totaled 1.5 billion, down from 1.54 billion.

* The price of the Treasury's 10-year note rose $1.25 per $1,000 invested, and its yield fell to 4.04 percent, from 4.06 percent on Monday.

* The dollar fell against the Japanese yen and the euro. In late New York trading, a dollar bought 109.76 yen, down from 109.86 late Monday, and a euro bought $1.2324, up from $1.2165.

* Light, sweet crude oil for October delivery settled at $47.10, up 75 cents, on the New York Mercantile Exchange.

* Gold for current delivery rose to $408.30 a troy ounce, from $405.30 on Monday, on the New York Mercantile Exchange's Commodity Exchange.