Oil prices retreated as the value of the dollar rose sending the markets soaring to close sharply higher with the Dow jumping 130 points to 12,876. Nasdaq leaped 43 points to 2488.

On the upside

The Wall Street Journal reported that Hewlett-Packard (NYSE: HPQ) is engaged in advanced discussions to purchase Electronic Data Systems (NYSE: EDS) for between $12 billion to $13 billion.

Shares of Excel Maritime (NYSE: EXM) surged after Lazard Capital Markets analyst Urs Dur said that drybulk shipping demand is expected to exceed supply.

Collective Brands (NYSE: PSS) forecast first quarter earnings above estimates while an analyst reassured investors that the $305 million in damages to be paid to Adidas will most likely be reduced.

On the downside

Gencor Industries (Nasdaq: GENC) reported sharply lower second quarter earnings.

Shares of Alesco Financial (NYSE: AFN) fell after IndyMac announced that it will defer interest payments on securities, some of which are part of Alesco's portfolio.

Clearwire (NYSE: CLWR) widened first quarter losses despite increased revenue.

In the broad market, advancing issues outpaced decliners by a margin of nearly 5 to 2 on both the NYSE and on Nasdaq. The Russell 2000 which tracks small cap stocks leaped 13 points to 733.