Updated from 4:09 p.m. EST

Blue chips marched to another four-and-a-half-year high and tech shares reversed early losses Wednesday as plunging gasoline prices helped buyers battle past Microsoft's ( MSFT) operating system travails.

The Dow Jones Industrial Average gained 81.96 points, or 0.73%, to 11,317.43, while the S&P 500 rose 7.81 points, or 0.6%, to 1305.04. The Nasdaq tacked on 9.12 points, or 0.4%, to 2303.35. The Dow finished at its highest level since May 21, 2001.

"Microsoft's news was put into perspective as the day moved along," said Art Hogan, chief market analyst with Jefferies. "The path of least resistance continues to be to the upside for this market."

About 1.48 billion shares traded on the New York Stock Exchange, with advancers beating decliners by a 11-to-5 margin. Trading volume on the Nasdaq was 2.15 billion shares, with advancers outpacing decliners 2 to 1.

Helping the bulls was a 5.5% swoon in gasoline futures, a move traders attributed to technical position following the expiration of the April crude contract on Tuesday. Gasoline was down 10 cents to $1.73 a barrel on Nymex, while crude fell 57 cents to close at $61.77 a barrel.

The Energy Department's weekly storage report showed that crude inventories unexpectedly fell by 1.3 million barrels last week, while gasoline stocks fell by 2.3 million barrels, and distillate inventories were down 800,000 barrels.

The 10-year Treasury bond was up 4/32 in price to yield 4.70% -- 4 basis points below the yield on the two-year note -- and the dollar was lower against the euro and the yen.

"We're getting a moderation in bond yields, and energy prices came down today," said Paul Nolte, director of investments with Hinsdale Associates. "We're looking at things more favorably than this morning. There's still residual analysis about the Federal Reserve, and we're seeing some gamesmanship heading into next week's meeting, debating how more hikes we have."

Shares of Microsoft were lower after the software giant moved back the release date of the consumer version of the Vista operating system (the next version of Windows). Amid a shake-up in the unit that produces the product, Microsoft said Vista will hit shelves next January, not before Christmas as previously planned. Microsoft lost 59 cents, or 2.1%, to $27.15.

The news took a toll on hardware makers. Hewlett-Packard ( HPQ) fell 0.5%, while Gateway ( GTW) finished down 2.9%.

General Motors ( GM) agreed on a plan with Delphi ( DPHIQ) and the United Auto Workers to give union members early retirement buyouts. The agreement will also allow 5,000 Delphi union members to move back to GM by 2007.

To view Gregg Greenberg's video take on today's market, click here .

On Tuesday, stocks gave up early momentum and fell fairly sharply after technical resistance was touched around 1310 on the S&P 500. The Nasdaq Composite bore the brunt of the selling, going from up 0.9% to down 0.9% at 2294 at the close. The Dow shed 0.4% to 11,235, while the S&P 500 fell 0.6% to 1297.

Wednesday's economic calendar was empty, although investors got another glimpse of brokerage strength when Morgan Stanley ( MS) reported its first quarter. The bank earned $1.64 billion, or $1.54 a share, up from $1.47 billion, or $1.35 a share a year ago. Revenue rose 24% to $8.5 billion from last year. Morgan was expected to earn $1.20 a share on revenue of $7.58 billion. The stock tacked on $1.53, or 2.5%, to $61.94.

Biogen Idec ( BIIB) shares were lower after the FDA extended by 90 days the review period for Tysabri, the multiple sclerosis drug sold by Biogen and Elan ( ELN), which was pulled from the market last year amid concerns it was causing a rare brain disease.

The FDA wanted more time to assess the companies' risk management plan. An FDA panel recommended earlier this month that Tysabri be allowed to return to the market. Biogen was down 21 cents, or 0.4%, to finish at $48.10. Elan lost 55 cents, or 3.8% to $13.80.

Another factor Wednesday was Nike's ( NKE) guidance, which calls for fourth-quarter revenue growth of 5% to 7% on strong demand in the U.S., but narrower margins due to higher input costs. Nike gained $1.87, or 2.2%, to $86.82.

The New York Times ( NYT) said it now expects first-quarter earnings in a range of 22 cents to 24 cents a share, affected by expenses of 2 cents to 4 cents a share related to job cuts. The Thomson First Call consensus stands at 29 cents a share. Shares fell 49 cents, or 1.9%, to $25.30.

Away from earnings, Lucent ( LU) has emerged as the surprise winner in the bidding for bankrupt Riverstone's networking business. Lucent's $207 million cash bid beat out a competing offer from Ericsson ( ERICY). Lucent was up 2 cents to $2.82. Ericsson rose 97 cents, or 2.5%, to $39.24.

Bristol-Myers Squibb ( BMY) finished higher after it and partner Sanofi-Aventis ( SNY) settled a patent lawsuit over its blood-thinner Plavix. A generic-drug company in Canada agreed to hold off marketing the multibillion-dollar treatment in the U.S. for five years. The stock jumped by $2.41, or 10.6%, to $25.24.

In early research, Bank of America downgraded Juniper ( JNPR) to hold from buy. Citigroup did the same to International Paper ( IP).

Juniper lost 37 cents, or 1.9%, to $18.99. International Paper was off 6 cents, or 0.2%, to close at $34.45.

Elsewhere, UBS raised its price target for video-game retailer GameStop ( GME) to $48 and for Altria ( MO) to $81.

GameStop rose 43 cents, or 1%, to $45.43. Altria added 81 cents, or 1.1%, to $73.27.

Overseas markets were mixed, with London's FTSE 100 up 0.3% at 6007 and Germany's Xetra DAX adding 0.4% to 5932. In Asia, Japan's Nikkei fell overnight 0.8% to 16,495, while Hong Kong's Hang Seng lost 1.8% to 15,643.
As originally published, this story contained an error. Please see Corrections and Clarifications.

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