U.S stocks edged higher on Tuesday as investors were expecting a deal for Greece to secure a new bailout.

The CBOE Volatility Index, widely considered the best gauge of market fear, closed below 18.

The Greek government was working out further austerity measures required by its international lenders as part of conditions for a second bailout. And the country' s talks with private creditor on debt reduction were also on the way.

The rescue plan is crucial for Greece as the country faces a potentially devastating default in March when large payments of debt fall due.

U.S. Stocks reversed their earlier losses as the efforts by the Greek government to avoid such default helped to ease investors concerns.

Meanwhile, Ben Bernanke, the Chairman of the Federal Reserve, reiterated his view on the U.S. economic prospect during his testimony to Congress on Tuesday, which was seen by traders as a confirmation of a continued policy of ultra low interest rate for at least another two years.

On earnings front, Coca-Cola beat Wall Street by reporting a profit of 1.65 billion dollars, or 0.72 dollar a share.

Meanwhile, the company's revenue jumped 5.2 percent to 11 billion dollars as worldwide unit case volume grew 3 percent.

Of all those S&P 500 companies that have released results, 60 percent beat expectations.

The Dow Jones industrial average gained 33.07 points, or 0.26 percent, to close at 12,878.20. The Standard & Poor's 500 added 2.72 points, or 0.20 percent, to 1,347.05. The Nasdaq Composite Index rose 2.09 points, or 0.07 percent, to 2,904.08.

The U.S. dollar fell against major currencies in late New York trading on Tuesday.

The dollar index dipped 0.64 percent to 78.56.

Crude prices rose on Tuesday as U.S. Energy Information Administration forecasted faster pace of world oil demand growth in 2012 and markets feared Iran may halt oil exports to Europe in its long-running dispute with the West over its controversial nuclear program.

Light, sweet crude for March delivery gained 1.50 dollars, or 1.55 percent to settle at 98.41 dollars a barrel on the New York Mercantile Exchange. In London, Brent crude also rose by 30 cents to close at 116.23 dollars a barrel.