By Kate Gibson and Polya Lesova, MarketWatch

NEW YORK (MarketWatch) -- U.S. stocks gained 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. 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 for investments at PNC Wealth Management.

"The other side is, we'll soon be turning our attention to earnings, and whether that confirms the story on the economic side," Dunigan added.

After rising 111 points to an all-time intraday high of 14,684.49, the Dow Jones Industrial Average (DJI) was up 71.74 points, or 0.5%, to 14,644.59 in late afternoon trade.

UnitedHealth Group Inc. (UNH) led gains among all but seven of the benchmark's 30 components. The health insurer rallied 4.7%.

UnitedHealth and other insurers surged after the government relinquished plans to cut payments for private Medicare Advantage insurers and said it would instead hike them by 3.3%.

Humana Inc. (HUM) rose 6.3%, even as the company warned of other challenges. Cigna Corp. (CI) gained 3.1% and Aetna Inc. (AET) rallied 4.8%.

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 6.70 points, or 0.4%, at 1,568.87. Health care posted the biggest gain among the 10 major sectors, while materials performed the worst.

"You look at these levels and a lot of people are scratching their heads. But if you look at past peaks, the market is on much better footing than five years ago. Whether you look at earnings, dividends, sales or book values, valuations are in much better shape," said Dunigan.

Hewlett-Packard Co. shares (HPQ) slumped 5.6% after Goldman Sachs downgraded the high-tech giant to sell from neutral.

The technology-heavy Nasdaq Composite index (RIXF) rose 14.46 points, or 0.4%, to 3,253.62.

Shares of Apple Inc. (AAPL) cleared gains and were lately down 0.3%. 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.

For every seven stocks rising eight fell on the New York Stock Exchange, where 359 million shares had exchanged hands by 2:40 p.m. Eastern.

Composite volume surpassed 2.2 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 the gauge remained in positive territory.

"Although we're in a recovery, it's still lackluster compared to others. We're still playing a lot of catchup. We lost about eight million jobs in the recession and gained back five million or so. By most historical recoveries, we should have added back all the jobs and then some," said Dunigan, who estimates Friday's U.S. monthly payrolls report will likely have the economy adding about 185,000 jobs in March.

In an ongoing bid to bring down the unemployment rate, the Federal Reserve has continued an accommodative monetary policy, which has also boosted equities.

"The Fed's continued program of low interest rates and quantitative easing will force investors into other asset classes. There's a lot of potential risk on the fixed-income side given where rates are, and with future rate increases. Cash might make you feel good, but it doesn't provide much return, so there is not much alternative to equities in this environment," said Dunigan.

Cash or ultra-short fixed-income positions are "a good way to go poor slowly," Brian Rehling, chief fixed-income strategist at Wells Fargo Advisors, told a gathering in New York City Tuesday.

Driven

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 43% 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 almost 12%, making the stock the biggest loser in the S&P 500.

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04-02-13 1501ET