Stocks Higher on GM Deal, Strong Earnings

U.S. stocks ended higher on Wednesday, with the Dow at its highest close in nearly 5 years, as investors bought shares of industrial companies like Caterpillar Inc. (CAT) on bets that rising interest rates won't derail corporate earnings growth.

The Dow Jones industrial average was up 81.96 points, or 0.73 percent, at 11,317.43. The Standard & Poor's 500 Index was up 7.81 points, or 0.60 percent, at 1,305.04. The Nasdaq Composite Index was up 9.12 points, or 0.40 percent, at 2,303.35.

Shares of heavy equipment maker Caterpillar rose 2.6 percent to $76.21 on the New York Stock Exchange and contributed the most to the Dow's advance. Caterpillar is in preliminary talks for a closer relationship with a Chinese engine maker.

The Dow industrials also got a lift from the shares of diversified manufacturer 3M Co., which gained 1.5 percent to $76.07 on the NYSE.

"So far the corporate profit outlook remains positive," said Eric Kuby, chief investment officer of North Star Investment Management Co.

"I don't hear a lot of companies saying they're going to reduce their profit forecasts because of interest-rate concerns, and that's a positive for the market," he added.

S&P Equity Research Services on Wednesday forecast first- quarter 2006 earnings for companies in the S&P 500 index will rise 11 percent year over year, with gains stemming from multiple sectors.

Caterpillar's climb helped the Dow offset a 2.1 percent drop in the shares of Microsoft (MSFT) Corp. The software maker announced late on Tuesday it would delay the consumer launch of a highly-anticipated operating system. Its stock ended down 59 cents at $27.15 on the Nasdaq.

Meanwhile, shares of Bristol-Myers Squibb (BMY) jumped 10.6 percent, or $2.41, to $25.24 on the NYSE, where they registered their biggest one-day percentage gain in six years.

The drug maker said late on Tuesday it had reached a deal in a legal dispute, helping it possibly keep patent protection on a key blood-thinning drug through 2011. Bristol-Myers' stock was the biggest positive influence on the S&P 500.

A rebound in the shares of business software maker Oracle Corp. (ORCL) also helped limit Microsoft's drag on the Nasdaq, along with a gain in the shares of Yahoo (YHOO) Inc.

Oracle shares rose 2.7 percent, or 37 cents, to $13.99.

Yahoo's stock gained 2.1 percent, or 64 cents, to $30.75 after Goldman Sachs said concerns about the Internet media company were overblown.

Shares of food and tobacco company Altria Group gained 1.2 percent, or 83 cents, to $73.29 on the NYSE after UBS analysts raised their price target on the stock. Altria was among the Dow's major gainers.

Volume was moderate on the NYSE, with about 1.49 billion shares changing hands, below last year's daily average of 1.6 billion. On Nasdaq, about 2.16 billion shares traded, above last year's daily average of 1.8 billion.

Advancers outnumbered decliners by a ratio of about 2 to 1 on both the NYSE and the Nasdaq.