Stocks climbed after the government issued a report on consumer prices and a statement by Federal Reserve Chairman Alan Greenspan suggested the central bank may stick to its policy of boosting interest rates at a "measured" pace.
Computer-related shares led the advance on optimism that Oracle's earnings, released after the close of trading, would indicate a pickup in technology spending.
Consumer prices excluding food and energy rose, the Labor Department said, matching the median estimate of economists. Greenspan, in testimony before the Senate Banking Committee, said inflation is "not likely to be a serious concern."
The Standard & Poor's 500-stock index gained 6.72, or 0.6 percent, to 1132.01. The Dow Jones industrial average rose 45.70, or 0.4 percent, to 10,380.43. The Nasdaq composite index increased 25.61, or 1.3 percent, to 1995.60.
The benchmarks pared gains in the final hour of trading amid speculation that a terrorist threat prompted the evacuation of a terminal at New York's John F. Kennedy International Airport, said William Kostoff, a sales trader at Jefferies & Co. in New York. Andrea Fuentes, a spokeswoman for the U.S. Transportation Security Administration, said after the market closed that a terminal had been evacuated for more than an hour while a suspicious piece of luggage was investigated. The bag was found to be harmless, she said.
Core prices rose 0.2 percent last month, after gaining 0.3 percent in April, the Labor Department report said. Prices paid by consumers increased 0.6 percent, the biggest jump since January 2001, as gasoline costs surged and dairy products climbed by the most since 1946. That followed April's 0.2 percent gain.
"The CPI numbers weren't anything that would set off a panic in the market," said Matt Sherman, a trader with National City Bank, which oversees $28 billion in Cleveland. "We're going to get a little bounce on this."
An index of computer-related companies gained 1.2 percent to pace the S&P 500's 10 industry groups. Oracle gained 16 cents, to $11.71. After the market closed, the world's No. 3 software maker said sales of new licenses for applications fell even as fourth-quarter earnings rose to 19 cents a share. The company was expected to earn 18 cents, according to Thomson Financial. The stock lost 12 cents, to $11.59, in extended trading.
IBM, the top computer company, climbed 47 cents, to $90.54. Intel, the world's biggest semiconductor maker, rose 44 cents, to $28.43. Microsoft, the largest software maker, increased 51 cents, to $27.41.
Johnson & Johnson fell 80 cents, or 1.4 percent, to $56.21, for the steepest drop in the Dow average. Lehman Brothers Holdings, the No. 4 U.S. securities firm, slipped $3.07, to $73.02, on concern that rising interest rates will slow earnings growth in the second half of the year.
Red Hat tumbled $2.24, to $22.06. The world's biggest distributor of the free Linux computer-operating system said Chief Financial Officer Kevin Thompson resigned after three years, a period in which sales rose 54 percent. Thompson will stay until a successor is hired, the company said.
Boeing gained 42 cents, to $49.25. After yesterday's market close, the company said it beat out Lockheed Martin to replace the U.S. Navy's fleet of Lockheed-built submarine-hunting planes in a contract worth $3.9 billion. Lockheed dropped 61 cents, to $49.84.
* The New York Stock Exchange composite index rose 120.82, to 6586.03; the American Stock Exchange index rose 11.56, to 1200.93; and the Russell 2000 index of smaller-company stocks rose 10.25, to 567.92.
* Advancing issues outnumbered declining ones by 7 to 2 on the NYSE, where trading volume rose to 1.34 billion shares, from 1.18 billion on Monday. On the Nasdaq Stock Market, advancers outnumbered decliners by 2 to 1 and volume totaled 1.51 billion, up from 1.38 billion.
* The price of the Treasury's 10-year note rose $14.69 per $1,000 invested, and its yield fell to 4.68 percent, from 4.87 percent on Monday.
* The dollar fell against the Japanese yen and the euro. In late New York trading, a dollar bought 109.34 yen, down from 111.25 late Monday, and a euro bought $1.2165, up from $1.2055.
* Light, sweet crude oil for July delivery settled at $37.19, down 40 cents, on the New York Mercantile Exchange.
* Gold for current delivery rose to $388.10 a troy ounce, from $383.60 on Monday, on the New York Mercantile Exchange's Commodity Exchange.