US stocks shot higher on Wednesday as oil prices slumped more than $3 and economic data showed strength in the US manufacturing sector and personal spending. The raft of upbeat news pushed the broad S&P 500 to its highest close in nearly 3-1/2 years while the blue-chip Dow finished at its highest since March, the technology-laced Nasdaq at its highest since January.
The tumble in crude - the biggest drop in three years - eased worries about the impact of high energy costs on corporate profits and consumer sentiment, boosting stocks.
Among those to benefit most were manufacturers, which are sensitive to high energy costs. United Technologies Corp rose $2.57, or 2.6 percent, to $100.15 and 3M Co gained 86 cents, or 1.1 percent, at $80.45.
"Oil prices are in our favour, finally, and it's also the time of year when people don't want to sell stocks, they want to buy stocks," said Scott Bleier, President of HybridInvestors.com, a stock market research advisory company.
"We're in the sweet spot in the calendar. November's been a spectacular month and December is starting off with a bang."
The Dow Jones industrial average rose 162.20 points, or 1.56 percent, to 10,590.22. The Standard & Poor's 500 Index added 17.55 points, or 1.50 percent, at 1,191.37. The Nasdaq Composite Index leaped 41.42 points, or 1.98 percent, to 2,138.23.
The Nasdaq notched its biggest rise since late October. The Dow and S&P made their largest one-day gains since early November.
Trading was heavy, with 1.8 billion shares changing hands on the New York Stock Exchange, above the 1.4 billion daily average for last year. About 2.3 billion shares were traded on Nasdaq, above the 1.69 billion daily average last year.
Advancers outnumbered decliners on the NYSE and Nasdaq by about 2 to 1.
Upbeat economic data on the manufacturing industry helped equities by buoying hopes of solid economic growth.
A report by the Institute for Supply Management showed that the outlook for US manufacturing improved in November as factories hired more workers. Meanwhile, US consumer spending rose a sharper-than-expected 0.7 percent in October, according to a government report.
In addition, the Federal Reserve said the US economy continued its expansion over the past month, with labour market conditions improving and business lending on the rise.
NYMEX January crude futures ended down $3.68 at $45.45 a barrel as inventory data reduced worries about inadequate inventories.
But the slide knocked energy-related stocks lower. The world's largest oil field services company, Schlumberger Ltd, was down 3.1 percent, or $2, at $63.63, and utility FirstEnergy Corp lost 6.5 percent, or $2.75, at $39.48.
Among other movers, Intel Corp rose more than 3 percent, or 72 cents, to $23.10. Wall Street is expecting an upbeat business update from the world's largest chip maker after the market's close on Thursday.
Semiconductors were also helped by a 5.2 percent rise in Novellus Systems Inc, up $1.41 to $28.35 a day after the maker of semiconductor manufacturing equipment forecast fourth-quarter financial results at the high end of its previous targets. The Philadelphia Semiconductor Index rose 3.83 percent.