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Merck & Co's shares climbed 3.6% to $58.72, giving the S&P 500 its biggest lift, after it reported stronger-than-expected earnings.
Further deal activity on the healthcare front also lifted the market. Britain's Reckitt Benckiser Group Plc confirmed talks to buy Merck's consumer health business, the latest asset up for grabs in a wave of recent pharmaceutical deals.
"Investors are viewing (that activity) as a signal for positive conditions in which businesses are willing and able to offer substantial sums of cash and/or stocks," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
Also supportive: most S&P 500 companies are beating earnings forecasts, albeit on lowered expectations, he said.
Earnings estimates have rebounded, however, as more companies have reported results. First-quarter profit growth for S&P 500 companies is seen at 3.7%, based on actual results and estimates for companies yet to report, compared with a forecast for 2.1% growth at the beginning of the month, Thomson Reuters data showed.
The Dow Jones industrial average rose 86.63 points or 0.53%, to 16,535.37, the S&P 500 gained 8.9 points or 0.48%, to 1,878.33 and the Nasdaq Composite added 29.142 points or 0.72%, to 4,103.543.
Shares of Facebook, up 3.6% at $58.15, led the way higher on the Nasdaq, a day after selling off along with a host of other momentum names.
Shares of Twitter jumped 4.6% to $42.62 ahead of its results after the bell, when it reported 255 million monthly active users, up from the previous quarter but not enough to satisfy investors. The stock was down 10.2% in after-hours trading.
Also after the bell, shares of eBay fell 3.8% to $52.45 as its second-quarter forecast fell short of estimates.
During the regular session, Sprint Corp shares jumped 11.3% to $8.27. The No. 3 US mobile provider reported an increase in quarterly revenue, as expected, due to a new billing plan that lowered wireless expenses.
On the down side, Coach Inc reported a sharp drop in North American sales and the stock slumped 9.3% to $45.71.
Archer Daniels Midland Co finished down 2.6% at $43.23 after its first-quarter profit and sales missed Wall Street estimates.
About 6.3 billion shares changed hands on US exchanges, below the 6.6 billion average this month, according to data from BATS Global Markets.
The Fed's two-day policy meeting began on Tuesday, with the central bank expected to again scale back its monthly bond purchase program. Investors will also be eager to get any guidance on when it might raise interest rates.
Data suggested the economy continued to gain momentum after the winter lull. US consumer confidence dipped in April but remained near a six-year high, while home prices rose in February.
