updated 3/23/2006 7:04:29 AM ET 2006-03-23T12:04:29

Stocks climbed Wednesday after upbeat news from big companies: a patent settlement by Bristol-Myers Squibb, strong earnings from Morgan Stanley and a cost-cutting deal between General Motors Corp., Delphi Corp. and the United Auto Workers. The gains were enough to push the Dow Jones industrial average to a new five-year high.

Major Market Indices

With scant economic data available, the market was driven by news from large-cap stocks. Bristol-Myers jumped 11 percent after the drug maker and its partner, Sanofi-Aventis SA, announced an agreement to settle a patent challenge. Investors were also cheered after Morgan Stanley’s quarterly profit rose 17 percent .

Transportation stocks rose after General Motors and parts maker Delphi announced a deal with the UAW that would help the struggling companies cut costs by offering buyouts to 113,000 U.S. hourly workers.

Tech stocks were flat after Microsoft Corp. said it would delay the launch of the consumer version of its new operating system , Vista, until January 2007.

(MSNBC is a Microsoft-NBC joint venture.)

“The news from Microsoft is a significant negative, but clearly the market isn’t buckling with that announcement,” said Bob Sitko, who manages more than $500 million as a lead portfolio manager with USAA Private Investment Management. Crude oil reserves were also lower than expected, but stocks remained resilient. “I’m quite pleased the markets have hung in as well as they have,” Sitko said.

The Dow rose 81.96 points, or 0.73 percent, to its highest level since May 21, 2001, while the broader S&P 500-stock index rose 7.81 points, or 0.6 percent, and the tech-heavy Nasdaq composite index rose 9.12 points, or 0.4 percent.

Bonds rose, with the yield on the 10-year Treasury note falling to 4.70 percent from 4.72 percent late Tuesday. The U.S. dollar was mixed against other major currencies. Crude oil futures declined.

Kim Caughey, equity research analyst, Fort Pitt Capital Group in Pittsburgh, said she was heartened by FedEx Corp.’s 35 percent jump in third-quarter profits . “The flow of goods is still happening around the world,” she said. “That can only point to good things for the global economy.”

FedEx rose $1.22 to $114.44.

Net income at Wall Street firm Morgan Stanley for its fiscal first quarter beat analysts’ expectations. The firm reported record revenues as both investment banking and fixed-income trading grew. The stock rose $1.53 to $61.94.

Microsoft fell 59 cents to $27.15 after the Vista announcement. While the company said the consumer version would be delayed, “I think the whole thing is going to be pushed back,” Caughey said, echoing the sentiments of investors.

Shares of Bristol-Myers Squibb Co. and partner Sanofi-Aventis SA jumped after the two drug makers agreed to settle a patent challenge to the blood thinning drug Plavix. Bristol-Myers rose $2.41 to $25.24; Sanofi-Aventis rose $4.20, or 9.6 percent, to $47.88.

The New York Times Co. fell 49 cents to $25.30 after the media company said it expects lower profits in the first quarter and reported uneven advertising results for February amid weakness at its New England media group, which includes The Boston Globe.

General Motors Corp. rose 1 cent to $22.01 after the company and auto parts supplier Delphi Corp. announced deals with the UAW that would help the struggling companies cut labor costs by offering early-retirement buyouts. Delphi, the largest U.S. auto parts supplier, is reorganizing under Chapter 11 bankruptcy protection.

Overseas, Japan’s Nikkei stock average fell 0.78 percent. Britain’s FTSE 100 rose 0.27 percent, Germany’s DAX index gained 0.35 percent and France’s CAC-40 climbed 0.90 percent.

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