Stocks climbed higher Wednesday as investors grew hopeful that the cycle of higher interest rates might soon draw to a close, but a late-session rise in oil prices limited Wall Street's gains. Bonds rallied, sending the yield on the 10-year Treasury note below 4 percent.

Data from the Institute for Supply Management indicated that the manufacturing sector is continuing to expand, albeit at a slower pace, and a component within the index that measures prices paid by purchasing managers suggested inflation remains in check. That was good news for U.S. markets, said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors.

"The Fed has told us they will continue to raise rates at a measured pace, but each decision will be made on the basis of existing or current conditions. And current conditions tell me that it's not a sure bet the Fed will raise rates at their June 30 meeting," Johnson said.

The Dow Jones industrial average rose 82.39, or 0.8 percent, to 10,549.87. The Standard & Poor's 500-stock index rose 10.72, or 0.9 percent, to 1202.22. The Nasdaq composite index climbed 19.64, or 0.9 percent, to 2087.86.

Movers

Google climbed 3.9 percent, or $10.73, to $288, after analysts at Credit Suisse First Boston raised the target price for the stock to $350 per share from $275. Piper Jaffray raised its target price for Google to $300 on Tuesday.

Delta Air Lines fell 3 cents, to $3.82, after the company said it renegotiated its credit agreement with General Electric's GE Capital division. The deal allows the airline to free up more money to cope with rising fuel prices.

SBC Communications slid 10 cents, to $23.28, after confirming it would offer high-speed Internet access for $14.95 a month for new residential subscribers -- far lower than its competitors.

School Specialty gained 20 percent, or $7.78, to $47, on news that the educational products distributor will be acquired by Bain Capital Partners, a private equity group, in a deal worth about $1.5 billion.

Indexes

New York Stock Exchange composite index rose 56.32, to 7190.65.

American Stock Exchange index rose 16.19, to 1488.77.

Russell 2000 index of smaller-company stocks rose 7.03, to 623.74.

Volume

NYSE: 1.41 billion shares, down from 1.48 billion on Tuesday. Advancers outnumbered decliners by 11 to 4.

Nasdaq: 1.8 billion shares, up from 1.67 billion. Advancers outnumbered decliners by 9 to 5.

Commodities

Crude oil for July delivery: $54.60, up $2.63.

Gold for current delivery: $415.30 a troy ounce, down from $416.30 on Tuesday.