By Kate Gibson and Polya Lesova, MarketWatch

NEW YORK (MarketWatch) -- U.S. stocks surged on Tuesday, with the Dow Jones Industrial Average hitting an intraday record and the S&P 500 not far behind, as health insurers rallied on positive news about Medicare reimbursement rates and U.S. factory orders rose in February.

"You have continued confirmation that the economy is in pretty good shape, and continues to be. Much of the data we're seeing supports continued expansion, and at a touch higher level than most people had factored in," said Jim Dunigan, managing executive, investments, PNC Wealth Management.

After rising 111 points to an all-time intraday high of 14,684.49, the Dow Jones Industrial Average (DJI) was up 99.49 points, or 0.7%, to 14,672.34 in early afternoon trade. UnitedHealth Group Inc. (UNH) led gains among all but five of the benchmark's 30 components. The health insurer rallied 5.9%.

UnitedHealth and other insurers surged after the Centers for Medicare and Medicaid Services said after Monday's closing bell that they would boost Medicare Advantage reimbursement rates, rather than cut them, as initially proposed.

Shares of Humana Inc. (HUM) rose 7.2% on Tuesday, even as the company warned of other challenges.

Also in the sector, Cigna Corp. (CI) gained 4% and Aetna Inc. (AET) rallied 4.1%.

After coming within 2.4 points of its intraday record of 1,576.09 set on Oct. 11, 2007, the S&P 500 index (SPX) was lately up 10.73 points, or 0.7%, at 1,52.90. Health care posted the biggest gain among the 10 major sectors, while materials was the only decliner.

Hewlett-Packard Co. shares (HPQ) slumped 6.2% after Goldman Sachs downgraded the high-tech giant to sell from neutral.

The technology-heavy Nasdaq Composite index (RIXF) rose 26.62 points, or 0.8%, to 3,265.79.

Shares of Apple Inc. (AAPL) gained 1.8%. Analysts at Goldman Sachs removed the stock from their U.S. conviction list, but maintained a buy rating on the consumer-electronics maker. Apple shares sank Monday as the company apologized after coming under criticism in China for customer-service policies.

Roughly three stocks rose for every two that fell on the New York Stock Exchange, where 236 million shares had exchanged hands by 12:15 p.m. Eastern.

Composite volume surpassed 1.4 billion.

In economic news Tuesday, the Commerce Department reported factory orders rose 3% in February, in line with expectations.

Wall Street saw pressure Monday after the Institute for Supply Management's factory index unexpectedly declined in March, although it remained in positive territory. While jobs data due Friday will be the main event of the week, investors may take some cues from Tuesday data.

"Despite some weak manufacturing data from the U.S., equities are attracting some investors this morning as we get [the second quarter] under way," said Mike McCudden, head of derivatives at stockbroker Interactive Investor in London. "We do, however, expect shares to wax and wane throughout the remainder of the week as investors grow nervous in the run up to the U.S. jobs number on Friday," he said.

Car makers were also in the spotlight as they reported March sales figures. Edmunds.com raised its 2013 forecast for U.S. light vehicle sales to 15.5 million, signaling optimism about the industry.

Ford Motor Co. (F) said its U.S. sales rose 5.7% in March and Chrysler Group LLC, which is owned by Italy's Fiat SpA , said its U.S. sales climbed 5% in March from the same period a year ago, marking the best monthly sales since December 2007.

General Motors Co. (GM.XX) said its U.S. sales rose 6.4% during March.

Shares of interdealer broker BGC Partners Inc. (BGCP) soared nearly 42% after Nasdaq OMX Group Inc. (NDAQ) agreed to acquire the firm's electronic Treasurys marketplace in a cash-and-stock deal valued at as much as $1.23 billion. Shares of Nasdaq OMX, however, fell 10%, making the stock the biggest loser in the S&P 500.

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(END) Dow Jones Newswires

04-02-13 1226ET