Stocks Run to New Records

At 10 a.m. EDT, the Institute for Supply Management said its manufacturing index rose to a reading of 55.0 in May from 54.7 in April. Economists expected a slight decline to 54.0.

"It does now appear there has been a real improvement in the state of the manufacturing sector," said Ian Shepherdson, chief economist with High Frequency Economics. "Whether this can last in the face of rising inventory and slowing retail sales growth is another question, but for now the sector looks much healthier than in the early part of the year."

Also after the opening bell, the University of Michigan said its consumer sentiment index was revised to 88.3 from a previous reading of 87.1, slightly better than estimates. On the downside, the National Association of Realtors said pending home sales unexpectedly fell 3.2% in April.

Treasury prices dropped after the economic reports. The 10-year note tumbled 16/32 to yield 4.96%, and the 30-year bond fell 23/32 in price, yielding 5.06%. The dollar rallied against the world's major currencies.

Helping boost tech shares was a 1.5% increase in Dell (DELL Quote), which said after the last close that it would cut 10% of its employees. At the same time, the PC maker's quarterly numbers were better than had been expected.

Also on the rise was publisher Dow Jones (DJ Quote), whose stock jumped 14.8% to $61.20 following word that the company's controlling family would be willing to hold talks with News Corp. (NWS Quote) and other potential acquirers. The announcement was a turnaround for the Bancrofts, a majority of whom had been opposing a $5 billion offer from News.