As the Dow Jones Industrial Average surged, member General Motors powered to a double-digit percentage gain and fellow component McDonald’s closed at a record high after super-sizing its dividend.

Countrywide Financial was another major mover, marking its biggest percentage gain in over seven years to distance itself from Wednesday’s four-year closing low.

The Dow Jones Industrial Average rose 133.23, or 1%, to 13424.88, now up three of the past four days, including Tuesday’s 180.54, or 1.4%, advance. The Nasdaq Composite Index on yesterday rose 8.99, or 0.3%, to 2601.06. The Standard & Poor’s 500 Index advanced 12.39, or 0.8%, to 1483.95. The New York Stock Exchange Composite Index rose 79.39, or 0.8%, to 9678.12.

“We had positive news out of General Motors and McDonald’s, which really powered the Dow,” the head of listed equity trading at Cantor Fitzgerald, Ed Laux, said. “And Libor came down a bit, which is a positive because it suggests that credit conditions are somewhat improving.” (Libor, or the London interbank offered rate, is a benchmark short-term rate that banks charge each other and that debt such as company loans and asset-backed securities are valued against.)

McDonald’s rose 3.10, or 6.1%, to 54.30, its biggest percentage gain in just over two years. The hamburger giant boosted its annual dividend by 50% to $1.50, effectively raising its promised total return to shareholders by several billion dollars.

General Motors gained 3.04, or 10%, to 33.29, its biggest percentage gain in nearly a year and a half. The president of the United Auto Workers, Ron Gettelfinger, is willing to agree in principle to the creation of a multibillion-dollar, union-controlled health-care trust fund to allow Detroit’s Big Three auto makers to shed $95 billion in retiree costs, the Wall Street Journal reported. Ford Motor, another beneficiary of such a move, rose 42 cents, or 5.6%, to 7.92.

Countrywide Financial gained 2.31, or 14%, to 18.93, the Big Board’s second biggest advancer. The largest American home lender obtained an additional $12 billion in credit from its banks as it continues grappling with a slowing housing market and a liquidity crunch afflicting the overall mortgage industry.

Alcatel-Lucent’s American depositary receipts fell 88 cents, or 8.8%, to 9.16, the stock’s lowest level since Alcatel SA and Lucent Technologies merged in November 2006 and the NYSE’s second biggest percentage decliner. The telecom-equipment giant cut its forecast for full-year revenue growth and said it expects thirdquarter operating profit to be “around break-even,” sending its shares tumbling.

Volume on the New York Stock Exchange was 1.27 billion shares. Up volume exceeded down by 920 million to 346 million, and stocks that rose in value exceeded those that fell by 1,933 to 1,355.

Investors took aim at Target, lifting shares 1.70, or 2.7%, to 64.42. The No. 2 American discount retailer behind Wal-Mart Stores is considering selling its credit-card operation, whose receivables are valued at about $7 billion, as well as reviewing the use of its debt and the pace of share buybacks.

The session saw significant gains by several retailers, including Kohl’s, which rose 3.23, or 6.1%, to 56.50, and Sears Holdings (Nasdaq), which gained 4.32, or 3.3%, to 133.84.

Cephalon (Nasdaq) fell 3.99, or 5.2%, to 72.55. The U.S. Food and Drug Administration warned health-care providers of serious adverse events, including deaths, occurring in patients treated with the biopharmaceutical concern’s cancer pain medication, Fentora.

Lehman Brothers rose 2.60, or 4.6%, to 59.68; Morgan Stanley gained 3.33, or 5.2%, to 66.79; and Bear Stearns rose 4.78, or 4.3%, to 66.79. Investors took positions in investment banks on sentiment that valuations have become appealing, especially if interest rates are cut next week.

King Pharmaceuticals continued its decline with a drop of 61 cents, or 4.9%, to 11.74. Shares have now fallen 18% since Tuesday, when a federal appeals court ruled against the drug company’s patent for its Altace blood-pressure medication, opening the door for generic knock-offs.

Qualcomm (Nasdaq) gained 1.30, or 3.4%, to 39.17. A federal appeals court issued a temporary stay of an International Trade Commission ruling that barred the import of advanced cellphones with Qualcomm chips.

General Cable jumped for a second straight day, by 4.81, or 8.4%, to 61.83. The stock, which rose 7.2% on Wednesday, was part of a strong metals group, and investors also responded to positive analyst comments following word on Wednesday that the maker of copper, aluminum, and fiber-optic wire and cable agreed to buy the global wire and cable business of Freeport-McMoRan Copper & Gold for $735 million. Miner Freeport-McMoRan was also strong yesterday, rising 4.60, or 5%, to 96.10.

Cablevision Systems advanced 82 cents, or 2.4%, to 34.62. The cable television and entertainment concern set October 24 for a special shareholder vote on an attempt by the company’s founding family to take it private.

Nucor gained 2.84, or 5.3%, to 56.30. The steelmaker agreed to acquire Nelson Steel, a wire mesh producer, for $54 million in cash.

Prudential Financial rose 2.94, or 3.3%, to 91.07. Credit Suisse upgraded shares to outperform from neutral, feeling the overall quality of the investment-service giant’s portfolio is above average, despite concerns about above-average exposure to bonds with subprime collateral.

ArcelorMittal’s American depositary receipts rose 3.50, or 5.5%, to 67.10. The steel titan announced the start of a buyback program for up to 27 million shares.

MeadWestvaco rose 1.06, or 3.5%, to 31.20. Credit Suisse raised its rating on shares of the packaging and specialty paper producer to outperform from neutral.