NEW YORK (CNNMoney.com) - The Dow rose to its highest level in nearly five years Wednesday as gains in the financial sector, an easing of interest-rate worries and uplifting earnings news fueled positive sentiment.

The Dow Jones industrial average (up 81.96 to 11,317.43, Charts) rose about 0.7 percent, pushing the index to its best close since May 21, 2001. If the Dow had closed just 21 points higher, it would stand at its highest point in nearly six years.

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The broader Standard & Poor's 500 (up 7.81 to 1,305.04, Charts) index added 0.6 percent and also remains near five-year highs.

The Dow and S&P flirted with five-year highs last week, when both gauges added about 2 percent in one of the best weeks for the market all year.

The Nasdaq composite (up 9.12 to 2,303.35, Charts) index added 0.4 percent, but tech shares lagged the broader market the entire session, due to the impact of Microsoft, which announced a product delay.

All three major gauges had see-sawed at the start, but blue chips gained strength around midday and pushed even higher by the end of the session.

"Yesterday's sell off created a little bit of a bargain today, and investors are stepping it up and taking advantage," said David Briggs, head of equity trading at Federated Investors.

Treasury prices also recovered slightly from Tuesday's sell off, lending support to stocks. Bond prices crept higher, lowering the yield on the benchmark 10-year note to 4.70 percent from around 4.71 percent late Tuesday. Treasury prices and yields move in opposite directions.

That gave a lift to financial stocks, as did a strong earnings report from Morgan Stanley. Biotech, networking, Internet and healthcare stocks were also among the day's big gainers.

Looking forward, the focus Thursday will be February existing home sales and the weekly read on initial jobless claims.

Beyond that, reports are due Friday on February durable goods orders and new home sales.

Generally, "I think that overall, the tone of the market remains pretty positive, and that should continue to support stocks," said Maria Fiorini Ramirez, president of Maria Fiorini Ramirez Inc.

Morgan Stanley (up $1.53 to $61.94, Research) reported higher quarterly earnings that beat estimates on record revenue, helping a number of Wall Street banks advance, including Bear Stearns (up $3.07 to $136.37, Research), JP Morgan (up $0.85 to $42.05, Research) and Goldman Sachs (up $2.42 to $151.82, Research).

Nike (up $1.87 to $86.82, Research) rose 2.5 percent after the sports apparel maker reported higher than-expected quarterly earnings that also beat estimates. FedEx (up $1.22 to $114.44, Research) also advanced on improved quarterly earnings.

Bristol-Myers (up $2.41 to $25.24, Research) surged 10.6 percent and Sanofi-Aventis (up $4.20 to $47.88, Research) jumped 9.6 percent on reports that the two drugmakers had agreed to settle a patent dispute regarding their blood-thinning drug.

Twenty-four out of 30 Dow components gained, with economically sensitive issues such as Caterpillar (up $1.90 to $76.21, Research) and 3M (up $1.14 to $76.07, Research) advancing the most.

General Motors (up $0.01 to $22.01, Research) buoyed the Dow industrials in the early going, but ended the session little changed.

The automaker said it reached an early retirement deal with bankrupt parts supplier Delphi (Research) and its auto workers union as part of its efforts to turnaround its ailing North American operations. (Full story)

Shares of Microsoft (down $0.59 to $27.15, Research) fell 2.3 percent after the No. 1 software maker said it wouldn't launch the consumer version of its Windows Vista operating system until early 2007, rather than the second half of 2006, due partly to security concerns.

Other tech companies, including PC makers Hewlett-Packard (down $0.18 to $33.36, Research) and Gateway (down $0.07 to $2.36, Research) fell in sympathy.

However, other techs were more upbeat, including the Internet sector.

Yahoo! (up $0.64 to $30.75, Research) advanced more than 2 percent after saying it would launch a service in the United States that lets people make phone calls through the company's instant messaging software.

Market breadth was positive. On the New York Stock Exchange, winners beat losers by eleven to five on volume of 1.48 billion shares. On the Nasdaq, advancers beat decliners by more than three to two on volume of 2.15 billion shares.

Crude prices gyrated after the government's report on fuel inventories showed a surprise decline in crude oil stocks. U.S. light crude oil for May delivery fell 57 cents to settle at $61.77 a barrel on the New York Mercantile Exchange after having hit as high as $62.85 earlier in the session.

COMEX gold for April delivery fell $1.50 to settle at $551.70 an ounce.

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