Stocks gained on Wednesday as a tentative labor agreement at General Motors Corp eased worries about Detroit's automakers and more weak economic data added to expectations for another cut in interest rates.
The GM accord, which still must be approved by a majority of United Auto Workers members, included a health-care trust fund aimed at limiting health-care costs, which raised hopes other carmakers would soon reduce their health-related costs.
Expectations that rate cuts would spur business spending lifted technology shares, with such companies as International Business Machines Corp and Cisco Systems Inc among the best performers.
Stocks seen likely to weather an economic downturn best, including health-care companies, also headed higher.
The Dow Jones industrial average was up 85.19 points, or 0.62 percent, at 13,863.84. The Standard & Poor's 500 Index was up 8.34 points, or 0.55 percent, at 1,525.55. The Nasdaq Composite Index was up 21.72 points, or 0.81 percent, at 2,705.17.
Companies that would benefit most from another cut in interest rates got a boost from data showing a larger-than-expected drop in August orders for durable goods -- manufactured items meant to last three years or more.
Rumors that another financial institution wanted to buy a minority stake in Bear Stearns Cos Inc sent shares of the Wall Street bank 5 percent higher before trimming gains to a 3 percent rise to $117.73. A spokesman for Bear Stearns declined to comment.
The GM deal allows the company to shift more than $50 billion of retiree health-care liabilities to an independent union-aligned trust fund.
Shares of GM, the biggest U.S. automaker, rose 4.8 percent to $36.08 on the New York Stock Exchange, while shares of rival Ford Motor Co. climbed 4.7 percent to $8.73. Shares of auto-parts makers also jumped on the GM news, with Johnson Controls up nearly 2.3 percent at $116.55.
IBM shares gained 1 percent to $117.7 on the NYSE, while shares of Cisco climbed 1.6 percent to $32.95.
(Additional reporting by Ellis Mnyandu)