An upgrade to Intel sent the Dow Jones Industrial Average to its highest close since June 2001 on Tuesday.

Lehman Brothers analyst Tim Luke said he expects Intel's capacity utilization and gross margins to bottom in the first half of 2005 after a year-long inventory correction. Luke also said that strong notebook sales could lead to a "solid" fourth quarter for Intel.

The analyst upgraded Intel from "equal weight" to "overweight," sending the stock 3.5% higher on the day.

The broader market also got a boost from buying in shares of beaten-down drug stocks. Pfizer gained 2.8%.

The Nasdaq surged 23 to 2150, the S&P 500 climbed 10 to 1205, and the Dow surged 97 to 10,758. Volume rose to 1.48 billion shares on the NYSE, and was unchanged at 2 billion on the Nasdaq. Advancers led 24-9 on the NYSE, and 20-11 on the Nasdaq. Upside volume was 79% on the NYSE, and 75% on the Nasdaq. New highs-new lows were 283-10 on the NYSE, and 173-23 on the Nasdaq.

After the close, Research in Motion beat estimates but offered mixed guidance. Cognos beat estimates, while Manugistics missed. Paychex met estimates.

During the day, InterActiveCorp gained 6% on plans to spin off its travel properties.

Cablevision jumped 13% after the company halted plans to spin off its Rainbow Media unit.

Jabil slipped despite beating estimates, while Silicon Storage plunged 14% on a warning.

SCO lost 7% on a widening loss, while ATI fell 6% after missing estimates.