Stocks notched modest gains Wednesday as better-than-expected earnings from Lehman Brothers and Sprint's much-awaited $35 billion acquisition of Nextel Communications provided a lift, even as crude oil prices rose to a 2-week high.

The Dow Jones industrial average (search) closed up 15 points, or 0.14 percent, to 10,691.45, its highest close since February. The Standard & Poor's 500 Index (search) gained 2.34 points, or 0.19 percent, to 1,205.72, its highest level in more than three years. The technology-laced Nasdaq Composite Index (search) finished up 2.71 points, or 0.13 percent, at 2,162.55, its highest close since June 2001.

Bullish corporate news has helped the Standard & Poor's 500 and the Nasdaq composite index stretch to their highest levels since the summer of 2001 this week, but the three-day rally appeared to stagger Wednesday as stocks drifted in and out of negative range. Analysts said the lack of strong selling pressure was a positive signal, though.

"The markets are a little bit flat, it's nothing rip-roaring. Normally when you get to a significant trading level ... there's a natural inclination to take profits," said Brian Pears, head equity trader at Victory Capital Management in Cleveland. "The fact that we're still higher speaks to the strength of the underlying bullish trend."

Oil prices trekked upward following the government's weekly inventory report, which showed a 100,000 barrel decline in crude stores. Supplies of distillate fuels, which include heating oil, were unchanged — a disappointment to traders who had expected a build of 1 million barrels. Light, sweet crude for January delivery surged $2.37 to $44.19 on the New York Mercantile Exchange (search).

"It's been back and forth all day," said Evan Olsen, head of equity trading at Stephens Inc. "Lehman's earnings seemed to offset the negative reaction to oil inventories."

Lehman Brothers Holdings Inc. (LEH) was up $2.25, or 2.6 percent, at $87.90, after reporting a 22 percent rise in fourth quarter profits. Earnings of $1.96 per share beat Wall Street estimates by a wide margin. A surge in its merger and acquisition business and record revenue and net income helped the brokerage's full-year earnings climb 39 percent.

Sprint agreed to buy Nextel in a cash-and-stock deal worth about $36 billion in order to gain more business customers and more wireless airwaves to transmit calls. Nextel (NXTL) shares fell 4.3 percent to $28.70 and Sprint (FON) also fell 4.3 percent, closing at $24.02. Analysts said it might take a few years for the two companies to integrate.

Best Buy Company Inc. (BBY) gained $2.82, or 5 percent, to $58.86 after the nation's largest electronics retailer reported a 21 percent rise in third-quarter profits. Per-share earnings of 45 cents beat estimates by a penny.

Nortel Networks Corp. (NT) declined 17 cents, or 4.6 percent, to $3.52. The Canadian telecommunications equipment maker reported a 6-cent loss for the quarter and predicted lower full-year sales.

In an initial public offering, shares of Las Vegas Sands Corp. (LVS) jumped 60.6 percent to $46.56 after the casino operator's IPO priced above the expected range.

Shares of Merck and Co. (MRK) rose 3 percent to $30.48, lending support to blue chips after brokerage Raymond James raised its rating on the drugmaker to "strong buy" from "market perform."

Traders also pointed to some volatility ahead of Friday's quadruple witching -- a term used by pros to describe the quarterly expiration of four different types of options and futures.

Buying was brisk in the bond market a day after the Federal Reserve issued a widely expected rise in short-term interest rates. At least some of the strength in stocks was attributed to declining yields on the 10-year note, which slipped to 4.07 percent.

"It looks like the 10-year is really dictating how people are moving money around," said Mark Donahoe, managing director at US Bancorp Piper Jaffray in Minneapolis. "I'm a little surprised there wasn't more of a sell-off (in stocks) today. ... But with the long bond closer to 4 percent, what's your alternative? Stocks."

Trading was heavy, with 1.7 billion shares changing hands on the New York Stock Exchange, above the 1.4 billion daily average for last year. About 2.3 billion shares were traded on Nasdaq, well above the 1.69 billion daily average last year.

Advancing stocks on the Big Board led declining stocks by a nearly 2-to-1 margin, while advancers led decliners by a nearly 3-to-2 margin on the Nasdaq.

The Russell 2000 index, which tracks smaller company stocks, was up 5.07, or 0.79 percent, at 648.61 — an all-time high.

Overseas, Japan's Nikkei stock average added 0.37 percent. In Europe, France's CAC-40 shed 0.30 percent, Britain's FTSE 100 gained 0.11 percent and Germany's DAX index was down 0.42 percent.

Reuters and the Associated Press contributed to this report.