NEW YORK (CNNMoney.com) - Stocks jumped Tuesday, with the Nasdaq composite etching out a fresh five-year high, as investors welcomed lower oil prices and news of sales and potential mergers.

The Dow Jones industrial average (up 58.91 to 11,203.85, Charts) added 0.5 percent and the broader Standard & Poor's 500 (up 8.12 to 1,305.93, Charts) index added 0.6 percent. The Nasdaq composite (up 8.62 to 2,345.36, Charts) index gained nearly 0.4 percent, closing at a fresh 2006 high and its highest level since February 2001.

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With no economic indicators, the session was driven by company news, including reports that 3M might sell its branded drug business and news that Merck boosted its first-quarter earnings forecast.

Investors also reacted positively to afternoon comments from Richmond Federal Reserve president Jeffrey Lacker.

That served to boost stocks Tuesday, but the market may turn more cautious later in the week, said Peter Cardillo, chief market analyst at S.W. Bach & Co..

He said that stocks could become vulnerable as "key economic data approaches," in particular, Friday's monthly job report.

Investors will be scouring the March employment report for both job growth and evidence of wage pressure, said Jack Ablin, chief investment officer at Harris Private Bank.

Ahead of that, Wednesday brings the weekly oil inventories report and a reading on the services sector of the economy.

In addition to the economic news, "I think we'll see the market trade on earnings, which should be fairly strong," said Ablin, noting that few major companies have warned about results as of yet.

The first-quarter earnings reporting period unofficially starts Monday, when Alcoa becomes the first Dow component to release its results.

At 6 p.m. ET, Nasdaq and S&P futures pointed to a flat open for stocks, when fair value was taken into account.

Maxtor (up $0.56 to $10.08, Research), a maker of computer disk drives, was likely to be active Wednesday. After the close, the company -- which is being bought by larger rival Seagate Technologies -- warned that its first-quarter earnings loss will be wider than it initially forecast, due to the acquisition.

Shares lost 3 percent after the close, while shares of Seagate (up $1.47 to $27.69, Research) lost 2 percent.

A variety of stocks advanced, with roughly two out of three Dow 30 stocks rising.

3M (up $1.16 to $77.00, Research) rose 1.5 percent on news that it was considering selling its branded drugs business.

Dow component Citigroup (up $0.80 to $48.21, Research) gained 1.7 percent after the Federal Reserve Bank of New York lifted a year-long ban on new acquisitions, indicating the bank has made strides in tightening internal controls.

Other bank stocks climbed as well, including Dow components JP Morgan Chase (up $0.68 to $42.27, Research) and American Express (up $0.80 to $53.23, Research).

Caterpillar (up $1.80 to $75.30, Research) and Honeywell (up $0.72 to $43.11, Research) boosted the Dow industrials, too.

Exxon Mobil (up $0.72 to $61.75, Research) increased 1.2 percent, rising with the broader oil stock sector. The Philadelphia Oil Service (up 3.50 to 211.76, Charts) sector index climbed 1.7 percent.

Component Merck (up $0.07 to $35.48, Research) ended modestly higher after saying that first-quarter earnings will top estimates, due to strong sales of its Zocor cholesterol drug and lower-than-expected costs.

Computer Sciences (up $2.51 to $59.80, Research) jumped 4.4 percent on news the computer services company is considering putting itself up for sale and will cut 5,000 jobs.

Electronics retailer Best Buy (up $1.56 to $57.00, Research) gained 2.8 percent after it said that although it laid off 300 workers at its corporate headquarters, it still plans to add jobs at its stores.

Shares of International Paper (up $0.18 to $34.90, Research) ended modestly higher after the timber and paper company agreed to sell most of its U.S. forest lands to a pair of private timberland investment firms for about $6.1 billion.

On the downside, Apple Computer (down $1.48 to $61.17, Research) slumped 2.4 percent after Lehman Brothers cut its 12-month price target to $73 from $80. The brokerage said the company's shares would likely stay range bound for the time being.

The session also brought a number of earnings warnings, typical of the first few weeks of a new quarter.

Late Monday, Powerwave Technologies (down $2.88 to $10.40, Research) said first-quarter revenue forecast would miss forecasts due to weaker-than-expected demand. The company, a maker of gear for wireless networks, saw its shares tumble nearly 22 percent in unusually active Nasdaq trading.

Also late Monday, Check Point Software Technologies (down $1.07 to $18.76, Research) issued a first-quarter earnings and revenue outlook that fell shy of analysts' forecasts. The maker of security software for corporate networks cited acquisition costs and slower growth in its industry. Shares fell 5.4 percent.

Market breadth was positive. On the New York Stock Exchange, advancers edged decliners by nine to seven on volume of 1.51 billion shares. On the Nasdaq, winners narrowly beat losers on volume of 2.05 billion shares.

Treasury prices edged lower, raising the yield on the benchmark 10-year note to 4.87 percent, up slightly from late Monday. Bond prices and yields move in opposite directions.

The dollar fell versus the euro and yen.

U.S. light crude oil for May delivery settled down 51 cents to $66.23 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery fell $3.70 to settle at $590.60 an ounce, after closing at a 25-year high the previous session.

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