The Nasdaq composite index rose 25.08 to 1,984.32, and the Dow Jones industrial average gained 164.55 to 10,405.67.
The day's tidbit of economic news was positive. Home sales in the United States totaled an annualized 5.33 million units in June, beating expectations, according to a government report. But the number was down slightly from 5.36 million units in May.
Investors moved in to pick up discounted shares of Lucent Wednesday after Lehman Brothers upgraded the stock to "strong buy." Shares were up 24 cents to $6.67 following Tuesday's steep declines on news that the company will lay off 15,000 to 20,000 more workers and take a $7 billion to $9 billion charge.
"It's simply a bounce from the pullback it has had in the last couple of days," said Justin McNichols, portfolio manager with San Francisco-based asset manager Osborne Partners Capital Management. He also noted the Lehman upgrade was a good excuse for investors to snap up the discounted shares.
SBC Communications was up $2.58 to $43.38 after reporting solid second-quarter results. The telecommunications company cited strong growth in its wireless and DSL businesses, and management said earnings might top estimates for the year.
PeopleSoft was also rising on a strong second quarter and Tuesday's news that full-year results could be up slightly. Shares were up $4.16 to $38.40.
CNET's Server Software index was up over 4 percent, the top gaining technology sector Wednesday.
Another software maker rising on strong results was Peregrine Systems. Shares shot up $4.36 to $25.76 after Peregrine reported strong revenue growth for its fiscal first quarter and earnings in line with expectations.
i2 Technologies was the Nasdaq's most actively traded loser. The business-to-business software company?s stock fell after it said on Wednesday it would cut a further 10 percent of its staff, or 587 jobs, to hasten a return to profitability. Shares were off $1.69, or 16 percent, to $8.60.
QLogic shares tumbled $6.30, or 15 percent, to $34.44 after reporting that first-quarter profit fell from the previous quarter but met analysts' estimates. The maker of switches that tie together computer storage networks also reported revenue below analysts' expectations.
Among technology bellwethers, Microsoft rose 95 cents to $67.27, Oracle gained $1.08 to $19.29, Cisco Systems gained 32 cents to 18.70 and Intel was up 54 cents to $29.42.
Amazon.com fell 55 cents to $11.51, AOL Time Warner rose $1.05 to $43.75 and Yahoo shed 10 cents to $16.87.
Staff and Reuters contributed to this report.