Wall Street enjoyed a broad rally as investors shrugged off some of the worries that have dogged stocks in recent weeks. The possible return of the 30-year bond was the biggest news of the day, but analysts said what really lured stock buyers back from the sidelines was Kerkorian's commitment to troubled auto maker GM. Considered a smart value investor, Kerkorian's unexpected move may have restored some faith in the market, which ultimately could turn sentiment around.

"It kind of surprised everyone that someone as savvy as him would talk about increasing his stake in a beleaguered company. It suggested that there is value in this market," said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors. "On the days the stock market reverses or changes direction, it's often hard, historically, to find a reason why, on that day. I used to say the market seems to reach magical moments, and this may very well be one of those magical moments, where the configuration of events is just enough to get investors back on the bandwagon."

The Dow closed up 127.69, or 1.2 percent, at 10,384.64, largely thanks to the 18 percent rise in GM's share price.

Broader stock indicators were also higher. The Standard & Poor's 500 index gained 14.48, or 1.25 percent, to 1,175.65. The Nasdaq composite index rose 29.16, or 1.5 percent, to 1,962.23.

The announcement that the government is considering bringing back the 30-year Treasury rattled the bond market, sending the yield on the 10-year note to 4.19 percent, up from 4.17 percent late yesterday. Prices of the existing 30-year Treasury also sank. The 30-year note, discontinued in 2001 at a time of government surplus, could provide important financing in an era of record budget deficits; a decision is expected in August.

The U.S. dollar fell today against other major currencies in European trading; gold prices rose. Oil futures rebounded from earlier lows, rising 63 cents to settle at $50.13 per barrel on the New York Mercantile Exchange after a weekly government report showed rising supplies of crude oil and gasoline.

"Oil is going to influence us every day, there's no doubt. Any time we see some drop in oil prices, that's good for the market," said Michael Palazzi, managing director of equity trading at SG Cowen Securities. "I think there's quite a bit of cash on the sidelines taking its cue from the positive news on GM, and from decent earnings projections."

GM soared $5.03 to $32.80 after Kerkorian's Tracinda Corp. offered to pay about $870 million for a nearly 5 percent stake in the automaker, a deal that would boost the billionaire's stake to nearly 9 percent. Kerkorian is seeking to purchase 28 million shares at $31 apiece.

Time Warner Inc. added 60 cents to $17.28 after the world's largest media company said its first-quarter earnings rose slightly on growth at its cable networks, cable TV and several one-time gains. Per share earnings beat the consensus estimate of analysts surveyed by Thomson Financial by a penny a share.

MetLife Inc. surged 12 percent, or $4.71, to $43.55, after the insurance company announced a 65 percent surge in first-quarter profits over last year on strong gains across all its business lines. The company raised its full-year earnings forecast based on the strong results and its planned acquisition of Travelers Life & Annuity and most of the international insurance operations from Citigroup Inc.

Communications tower management firm American Tower Corp. was down 1 cent at $17.20 after announcing plans to pay $3.1 billion in stock to acquire rival SpectraSite Inc., a Cary, N.C.-based operator of wireless and broadcast signal towers. SpectraSite added 8.9 percent, or $5.00, to $61.20.

Genzyme Corp. was up 12 cents at $60.02 after announcing plans to acquire Bone Care International in a deal valued at about $600 million. Bone Care soared 35 percent, or $8.28, to $32.11.

The Russell 2000 index of smaller companies was up 10.74, or 1.84 percent, at 595.22.

Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange. Preliminary consolidated volume came to 2.32 billion shares, compared with 2.16 billion traded yesterday.

Overseas, Japanese financial markets were closed today for People's Holiday, a national holiday. Trading will resume on Friday after the annual "golden week" holidays.