U.S. stocks rose Tuesday as takeover activity in the technology sector reassured investors about equity valuations and offset apprehension about a monetary policy meeting beginning at the Federal Reserve.

The Dow Jones industrial average was up 61.93 points, or 0.51 percent, at 12,288.10. The Standard & Poor's 500 Index was up 8.88 points, or 0.63 percent, at 1,410.94. The Nasdaq Composite Index was up 13.80 points, or 0.58 percent, at 2,408.21.

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Optimism about the technology sector may roll into Wednesday's session after Oracle Corp. (ORCL) reported earnings that beat Wall Street expectations, sending its shares higher after the market close..

Software maker Adobe Systems Inc. (ADBE) also reported slightly higher-than-expected results.

Affiliated Computer Services (ACS) Inc. stock shot up nearly 17 percent after the company received a $5.9 billion buyout bid.

"The fact is, there's so many companies with such low leverage on their balance sheets. In aggregate, so many corporate balance sheets are in such good shape," said Lincoln Anderson, managing director and chief investment officer at LPL Financial Services in Boston. "That's what's driving the buyouts and takeovers."

Trading was moderate on the NYSE, with about 1.45 billion shares changing hands, below last year's estimated daily average of 1.84 billion, while on Nasdaq, about 1.71 billion shares traded, below last year's daily average of 2.02 billion.

Oracle shares were up 4.6 percent to $18.35 in electronic composite trading. During the regular session, the stock added 2.2 percent. Adobe shares climbed 3.8 percent to $42.29 after the closing bell.

Shares of Palm Inc. (PALM), the handheld computer and cell phone maker, rose on reports that the company may be close to a $2 billion buyout deal, with mobile phone makers Nokia and Motorola Inc. (MOT) said to be among the bidders.

Palm shares ended up 3.5 percent at $18.77 on Nasdaq, while Motorola shares were up 2.9 percent at $18.82 on the NYSE.

Subprime mortgage lender Accredited Home Lenders (LEND) Holding Co. secured financing, helping to quell fears that turmoil in the industry that lends to home buyers with sketchy credit would spawn wider trouble for the economy.

Accredited Home shares surged 20.3 percent to $10.77 on the Nasdaq.

The Fed's policy-making Federal Open Market Committee began its two-day meeting on Tuesday. The Fed was expected to hold its benchmark federal funds rate steady at 5.25 percent, but investors will focus on its statement on the outlook for the economy and future interest rate policy, expected Wednesday afternoon.

Shares of Affiliated Computer (ACS) rose 16.9 percent to $59.95 on the New York Stock Exchange after its founder, Darwin Deason, and investment fund Cerberus Capital Management offered to buy the computer services company.

On the downside, shares of oilfield services company Halliburton Co. (HAL) and those of its rivals declined after the company said its first-quarter profit will not meet Wall Street estimates due to decreased drilling completion in Canada and the northern United States.

Halliburton stock was down 5.9 percent at $30.50 on the NYSE. BJ Services Co. declined 2.7 percent to $26.62 and Weatherford International Ltd. fell 1.8 percent to $44.36, both on the NYSE.

In economic news, a government report showed a stronger-than-expected pace of home construction in February, easing concerns about the impact of subprime mortgage troubles on housing.

Advancing stocks outnumbered declining ones by a ratio of about 5 to 2 on the NYSE and by more than 9 to 5 on the Nasdaq.

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