Shares of Time Warner, the world's largest media company, advanced 1.9 percent to $17.90 on the New York Stock Exchange after the company reported a bigger-than-expected 80 percent increase in quarterly profit. It also said its high-speed Internet and digital phone services drew more subscribers and online advertising sales rose.
"Stocks came from an oversold position in October and today's news helped trigger some heavy buying," said Warren Simpson, a managing director at Stephens Capital Management in Little Rock, Arkansas, with $2.5 billion in assets. "Many fund managers are beginning to position themselves for a possible year-end rally."
The Dow Jones industrial average closed up 65.96 points, or 0.63 percent, at 10,472.73. The Standard & Poor's 500 Index rose 12 points, or 1 percent, to 1,214.76. The technology-laced Nasdaq Composite Index was up 30.26 points, or 1.43 percent, at 2,144.31.
The S&P now shows small gains for the year, while the Dow and Nasdaq are still mired in negative territory.
Video game publisher Electronic Arts Inc reported stronger-than-expected quarterly results and four US cable operators announced a joint venture with Sprint Nextel Corp.
Comcast Corp, Time Warner's cable division, Cox Communications Inc and Advance/Newhouse Communications will work with Sprint Nextel to develop new wireless services.
Comcast gained 2.5 percent to $28.80, while Sprint Nextel added 3.7 percent to $24.73.
Shares of Electronic Arts rose 8 percent to $60.23 on Nasdaq after the video game publisher said on Tuesday it had a smaller-than-expected drop in quarterly profit.
"The tech sector has been one of the most undervalued, and it's one of the sectors where we are going to see a rebound," said Giri Cherukuri, head trader at OakBrook Investments LLC, which oversees $1.3 billion in assets.
Shares of Apple Computer Inc helped the tech sector, jumping to an intersession record high of $60 and closing up 4.3 percent at $59.95 on Nasdaq.
Investors placed bets on growth in Apple's digital music and video operations.
MBIA Inc climbed after The Wall Street Journal reported Wednesday that the largest US insurer of municipal bonds is close to settling civil investigations into its accounting by federal and state authorities, agreeing to pay less than $100 million in fines and damages and accepting a review of past practices.
MBIA stock rose 8.7 percent to $62.49 on the NYSE.
Trading was heavy on the New York Stock Exchange with 1.99 billion shares traded, above last year's daily average of 1.46 billion shares. NYSE advancing shares outnumbered decliners by a ratio of about 3 to 1.
On Nasdaq, 2.18 billion shares were traded, above last year's daily average of 1.88 billion. Nasdaq gainers exceeded decliners by a ratio of about 5 to 2.