Dow up in March after 6 down months

Stocks rise on the session. Blue-chip indicator posts the first monthly gain since August, but declines for the quarter.

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NEW YORK (CNNMoney.com) -- Stocks surged Tuesday, recharging the rally that gave the Dow Jones industrial average its first month of gains after six straight declines. But all three major gauges declined in the first quarter.

On Tuesday, the Dow Jones industrial average (INDU) rose 87 points, or 1.2%. The S&P 500 (SPX) index gained 10 points, or 1.3%. The Nasdaq composite (COMP) rose 27 points, or 1.8%.

All three major gauges had posted bigger gains through the late afternoon, but the advance lost some steam near the close.

Stocks fell for the previous two sessions as worries about the auto and bank sectors caused a selloff. Prior to that, stocks had gained more than 20% as the Dow and S&P 500 bounced off 12-year lows. The gains were sparked by optimism that the economy is closer to stabilizing.

Up until the last few minutes of trade, the Dow had been on track to see its best March since 1928. But some late selling left the blue-chip indicator with a monthly gain of just 7.7% - the best since March 2002. The S&P 500 gained 8.5% in March, its best since March 2000.

The Nasdaq gained 10.9%, its best March ever, going back to its inception in 1971.

Year-to-date, the Dow is down 13.3%, making the first quarter its worst since 1939, according to Dow Jones. For the quarter and year-to-date, the S&P 500 is down 11.7% and the Nasdaq is off 3%.

Part of Tuesday's advance was a certain quarter-end dynamic, which tends to bring in portfolio managers who want to put some cash to work at the end of the three-month period.

But the advance through most of March also reflects a shift in sentiment in Washington and beyond, said Larry Glazer, managing director at Mayflower Advisors.

"The government has become more supportive of the stock market," he said. "It's the idea that what's good for Wall Street is good for Main Street."

He said that Treasury's plan to buy up bad bank assets, announced last week, was significant. Also helping was the fact that the government was at least removing some of the uncertainty around the future of GM and Chrysler, even if investors remain wary of a potential bankruptcy.

But most important for investors recently, Glazer said, has been the Fed move to buy up billions in long-term Treasurys, which is lowering interest rates, as well as the still relatively low energy prices.

Both of these developments are giving consumers "a little more breathing room and allowing them to participate in the economy," Glazer said. "It's a positive for stocks that the alternatives for cash are so negative."

Wednesday preview: The morning brings reports on employment, manufacturing, housing, construction spending and oil inventories. March sales from the nation's automakers are due throughout the day.

Standouts include the February pending home sales index, which is expected to show no change after having fallen 7.7% in the previous month.

Private-sector employers are expected to have cut 663,000 from their payrolls in March after cutting 697,000 jobs in February. The report from payroll services firm ADP is closely watched ahead of Friday's monthly employment report from the government.

On the move: Stock gains were broad-based, with 23 of 30 Dow stocks rising.

Dow gainers included IBM (IBM, Fortune 500), Chevron (CVX, Fortune 500), McDonald's (MCD, Fortune 500), 3M (MMM, Fortune 500), Microsoft (MSFT, Fortune 500) and Alcoa (AA, Fortune 500).

The Dow's financial components spiked too, continuing the recovery off multi-year lows. Bank of America (BAC, Fortune 500), Citigroup (C, Fortune 500) and JPMorgan Chase (JPM, Fortune 500) all gained.

General Motors (GM, Fortune 500) slumped 28%. On Monday, the Obama administration rejected turnaround plans from GM and Chrysler, saying a bigger overhaul is needed if they want more taxpayer money. As part of the revamp, GM CEO Rick Wagoner was asked to step down. Late Monday, Obama appointed an auto czar to focus on the industry's woes.

Market breadth was positive. On the New York Stock Exchange, winners topped losers three to one on volume of 1.65 billion shares. On the Nasdaq, advancers beat decliners by over two to one on volume of 2.2 billion shares.

Economy: The S&P/Case-Shiller Home Price index fell a record 19% in January from a year earlier, after falling a record 18.6% in December. The index is a measure of 20 major metropolitan areas.

The March consumer confidence index from the Conference Board rose to 26 from 25.3, missing forecasts for a rise to 28.

The Chicago PMI slipped to 31.4 in March from 34.2 in February, missing forecasts for a slight improvement to 34.3.

President Obama arrived in Europe for Thursday's G-20 meeting of leaders from the world's largest economies. The president is expected to address worries about some of the United States' policies and also push for greater financial regulation.

Bonds: Treasury prices rose, lowering the yield on the benchmark 10-year note to 2.68% from 2.71% Monday. Treasury prices and yields move in opposite directions.

Lending rates were mostly higher. The 3-month Libor rate dipped to 1.19% from 1.21% Monday, according to Bloomberg.com. The overnight Libor rate rose to 0.51% from 0.29% Monday. Libor is a bank-to-bank lending rate.

Other markets: In global trading, Asian markets ended higher with the exception of the Nikkei. European markets ended higher.

In currency trading, the dollar fell versus the euro and gained against the yen.

U.S. light crude oil for May delivery settled up $1.25 to $49.66 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery rose $7.30 to settle at $925 an ounce.

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