Wall Street opened the second quarter with solid gains on Wednesday, extending a four-week rally that brought the market off its lowest levels in 12 years.
After falling in the early going on disappointing jobs data, the Dow Jones industrials ended 153 points higher following economic data that showed a rebound in pending home sales and improving manufacturing activity. Major indexes all rose at least 1.5 percent.
The Dow rose 152.68, or 2 percent, to 7,761.60, and broader market indicators also rose. The Standard & Poor's 500 index rose 13.21, or 1.7 percent, to 811.08, and the Nasdaq composite index gained 23.01, or 1.5 percent, to 1,551.60.
The reports continued a strong run of positive news on the economy in recent weeks that has led many investors to wager that the recession is beginning to ease its grip. Further signs of improvement in the disastrous housing market were especially positive for banks, which are still struggling with mounds of bad mortgage debt.
Technology and energy shares also carved out advances Wednesday. As sentiment about the economy improves, investors have been buying up industries they believe are likely to lead the country out of recession.
The Dow charged ahead in March, rising 16 percent off of 12-year lows hit early in the month, but its movements over the first three months of the year have been among the most tumultuous on record. Only three other times in the Dow's history has it experienced 20 percent swings in both directions in one quarter.
Despite the strong gains in March, analysts are still warning against calling a bottom to the market and say more volatility could be in store.
"People seem to swing from one side to the other of 'the recovery has started' to 'the world is ending again,'" said Bill Stone, chief investment strategist at PNC Wealth Management.
More positive economic data helped drive the rally on Wednesday. Pending home sales rebounded in February from a record low, the National Association of Realtors reported, while the Institute for Supply Management's index of manufacturing activity contracted in March but by a bit less than anticipated.
"It's hard to call it good data in a normal environment but it certainly looks like some of the ... housing activity has at least stabilized," said Stephen Massocca, managing director at Wedbush, Morgan Securities. "That's helping the market quite a bit here."
Not all of the reports came as a relief. The ADP National Employment Report said private sector employment dropped by 742,000 in March. The figure was higher than anticipated, and a rattling sign ahead of the Labor Department's Friday report on nationwide job cuts last month.
The market's advance occurred as the world's finance ministers gathered in London to discuss the slumping global economy. Speculation has risen in recent days that the various countries in the Group of 20 are disagreeing about how to handle the global financial crisis. Amid the backdrop of thousands of protesters, British Prime Minister Gordon Brown said Wednesday that the G20 was close to agreeing on global reforms for the financial system.
This week so far has been volatile, with the Dow gaining 87 points on Tuesday after plunging Monday by 254 points on President Barack Obama's rejection of General Motors Corp. and Chrysler LLC.'s restructuring plans.
Analysts expect that theme to continue in coming weeks as uncertainty about first quarter earnings reports hangs over the market. "We're in a wait-and-see mode," said Brian Bush, director of equity research at Stephens Inc.
Analysts largely expect the reports to be negative, but with the bar already set so low, it's possible the market could move higher if the reports meet or exceed expectations.
Among the big gainers in the banking industry, Citigroup Inc. added 15 cents, or 5.9 percent, to $2.68, while JPMorgan Chase & Co. gained $1.56, or 5.9 percent, to $28.14.
Hope for an easing of certain accounting rules this week is also helping banks. "Mark-to-market" rules, which require banks to value assets based on current market conditions, have hampered banks with massive write-downs in recent quarters, and proponents of a change say it could banks boost their bottom lines.
The Russell 2000 index of smaller companies rose 6.41, or 1.5 percent, to 429.16.
Advancing issues outnumbered decliners by more than 3 to 1 on the New York Stock Exchange, where consolidated volume came to 5.9 billion shares, essentially flat with Tuesday.
Bond prices were little changed. The yield on the benchmark 10-year Treasury note slipped to 2.66 percent from 2.67 percent late Tuesday. The yield on the three-month T-bill rose slightly to 0.21 percent from 0.20 percent Tuesday.
Crude oil fell $1.27 to settle at $48.39 a barrel on the New York Mercantile Exchange.
The dollar was mixed against other major currencies. Gold prices rose.
Overseas, Britain's FTSE 100 rose 0.8 percent, Germany's DAX index rose 1.1 percent, and France's CAC-40 rose 1.2 percent. Japan's Nikkei stock average rose 3 percent.