Stocks rose on Wednesday, lifting the Nasdaq 2 percent, as investors snapped up technology shares following the market's two-day sell-off.

News of government aid for insurers added to the positive tone, along with a proposed takeover in the home-building sector.

Microsoft Corp , up 4 percent, gave the biggest boost to the Nasdaq, while IBM , up 2.5 percent, bolstered the Dow.

The Dow Jones industrial average <.DJI> was up 79.80 points, or 1.02 percent, at 7,869.36, not far below its session high at 7,887.52. The Standard & Poor's 500 Index <.SPX> was up 10.95 points, or 1.34 percent, at 826.50, slightly off a session high at 828.42. The Nasdaq Composite Index <.IXIC> was up 29.93 points, or 1.92 percent, at 1,591.54. Earlier, the Nasdaq rose as much as 2.2 percent to a session high at 1,595.97.

(Reporting by Ellis Mnyandu; Editing by Jan Paschal)