For the market, deal-making "remains a key driver," said Michael Malone, trading analyst at Cowen & Co. "It remains unpredictable and it remains hard to tell who's going to be taken out and when. That will continue as long as interest rates stay low."
News Corp.'s $5 billion bid for Dow Jones & Co. on Tuesday was followed by reports that Cablevision Systems is near a deal to be purchased for $10.5 billion.
The Dow Jones Industrial Average was up 83 points at 13,220, a new record high, as 26 of its 30 components advanced.
Among blue-chips, Citigroup Inc. gained 0.3% after saying it will buy financial services outsourcing company Bisys Group for $1.45 billion in cash.
The S&P 500 rose 10 points to 1,496, while the Nasdaq Composite gained 22 points to 2,554.
The market overcame a pre-opening report from ADP, which said private-sector jobs rose by only 64,000 in April, the weakest monthly growth in four years. The report precedes the official jobs report from the government on Friday.
"It's earnings season and people are focusing on earnings, but the figure reminded people that the labor market is softening," said Peter Boockvar, equity strategist at Miller Tabak.
But According to Cowen's Malone, the market is now less concerned about slowing growth following evidence of receding inflationary pressures.
"If growth were to slow further, the Fed would be in a position to cut rates," he said.
At the same time, news that factory orders rose 3.1% in March, ahead of the 2.2% expected by Wall Street economists, reassured investors about economic growth.
In the broad market for equities, trading volumes showed 459 million shares exchanging hands on the New York Stock Exchange and 582 million on the Nasdaq stock market. Advancing issues topped decliners by 23 to 6 on the NYSE and by 19 to 7 on the Nasdaq.
By sector, multimedia , industrials , telecoms , metals miners , airlines and broker/dealers all advanced strongly.
Shares of Dow Jones & Co. , publisher of this report, fell 1.7% Wednesday after surging 55% on Tuesday when News Corp. unveiled its unsolicited bid.
Although the Bancroft family, which owns a controlling stake in Dow Jones, indicated that it will narrowly vote against the offer, there was speculation that other bids might surface.
Elsewhere, Cablevision Systems gained 8%. The firm is reportedly near a deal to be bought for at least $10.5 billion by its founding family, the Dolans.
Stocks on the move
Time Warner Inc.'s stock was up 2.5%. The media company's quarterly net income dropped below year-earlier levels, but its earnings were above analysts' expectations.
Shares of Chipotle Mexican Grill Inc. jumped 16%. The restaurant chain reported a stronger-than-expected profit rise.
Gap Inc. rose 3.2%. It is considering potentially sizeable layoffs to help reduce expenses and also to eliminate the bureaucracy that has stifled creativity in recent years, The New York Post reported in its Wednesday editions.
Treasurys shook off losses to trade higher, after the ADP report suggested that the monthly employment report will show weaker-than-forecast overall jobs creation. The benchmark 10-year Treasury note last was up 3/32 at 99-31/32 with a yield of 4.629%.
The Treasury Department announced that the quarterly refunding next week will total $32 billion, including $14 billion in 3-year notes. After next week's auction, the department will suspend issuance of 3-year notes, in light of a shrinking deficit.
The dollar pared its gains after the ADP report. The dollar rose 0.2% to 119.97 yen as the ero fell 0.1% to $1.3586.
Crude-oil futures were flat as traders braced for weekly data on U.S. supplies, expected to show a second-weekly rise in crude inventories alongside draws in gasoline and distillates.
Crude for June delivery was trading down 8 cents at $64.32 a barrel in electronic trade.
Gold futures extended their prior-session losses, as crude-oil prices were flat and the dollar posted some gains. Gold for June delivery fell $4.80 to $672.50 an ounce on the New York Mercantile Exchange.
By Nick Godt