Stocks: New quarter, new rally

Wall Street extends the recent advance after better-than-expected manufacturing and housing reports.

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NEW YORK (CNNMoney.com) -- Stocks recharged their advance Wednesday, with investors starting off the new quarter on the right foot, following better-than-expected readings on housing and manufacturing.

Investors seemed to take in stride dismal March sales from the automakers.

The Dow Jones industrial average (INDU) rose 153 points, or 2%. The S&P 500 (SPX) index gained 13 points, or 1.7%. The Nasdaq composite (COMP) added 23 points, or 1.5%.

Stocks had tumbled at the open on a worse-than-expected jobs report and talk that the automakers will have to go into bankruptcy to restructure. But the selling pressure eased as the day wore on.

Stocks gained in March at the end of the Dow's worst first quarter in 70 years. The blue-chip indicator gained 7.7% during the month, but fell 13.3% in the first quarter, its worst January-March showing since 1939.

The Dow and S&P 500 briefly touched more than 12-year lows in early March, before bouncing back on optimism that the economy is closer to stabilizing.

April can be a tricky month for Wall Street. It's the Dow's best month of the year going back to 1950, according to the Stock Trader's Almanac, good for an average gain of 1.9%.

But in bear markets, April can be wretched. In April 2002, during the last bear market, the Dow lost 4.4% for its worst April since 1970.

"I think we saw a significant low in early March," said John Wilson, chief technical strategist at Morgan Keegan. "That doesn't mean we're going straight up from here, but it does mean this run could end up being more than just another hideous bear market rally."

He said that the real test will come over the next few weeks as investors sort through the first-quarter results, which are expected to be pretty terrible.

Investors were gearing up for the start of the G-20 meeting in London Thursday, which brings together leaders from the world's largest economies. President Obama is expected to make the push for a bigger global economic stimulus effort.

He is also expected to detail the new financial regulations pitched to Congress last week as a means of preventing another financial meltdown like the current one. (Full story)

The weekly jobless claims report and February factory orders index are also due Thursday.

Autos: March auto sales fell 35%, but a rise from February levels could suggest the industry has bottomed.

Ford Motor (F, Fortune 500) said sales fell 41% from a year ago, although sales were up from January and February levels. Ford, considered to be in the best financial shape of the three Detroit automakers, had been expected to post a decline of 50%.

Toyota Motor (TM) said sales fell 39% and Honda Motor (HMC) said sales fell 36%.

General Motors (GM, Fortune 500) said sales fell 45% in the month, while privately held Chrysler said sales fell 39%.

GM and Chrysler have managed to stay afloat due to billions in aid from the government, but are in danger of being forced into bankruptcy if they can't come up with a plan to stay viable.

The Obama administration rejected both companies' restructuring plans Monday. GM has 60 days to figure out how to cut costs and debt. Chrysler has 30 days to complete a deal with Fiat. Barring that, the government could force both companies into bankruptcy court to restructure.

Economy: Reports on housing, jobs and manufacturing were released in the morning.

The pending home sales index rose 2.1% in February, surprising economists who were expecting a flat reading. Pending home sales fell 7.7% in January.

Private-sector employers cut 742,000 jobs from their payrolls in March after cutting a revised 706,000 in February, according to a report from payroll services firm ADP. Economists surveyed by Briefing.com thought employers would cut 663,000 jobs. The report was closely watched ahead of Friday's monthly jobs report from the government.

The Institute for Supply Management's manufacturing index rose to 36.3 in March from 35.8 in February, versus forecasts for a rise to 36.

February construction spending fell 0.9%, the government reported, after dropping a revised 3.5% in January. Economists thought spending would fall 1.9% in the month.

Company news: Diversified manufacturer 3M (MMM, Fortune 500) said it was cutting 1,200 jobs worldwide in the first quarter, or 1.5% of its workforce. Shares of the Dow component rose nearly 2%.

Market breadth was positive. On the New York Stock Exchange, winners beat losers three to one on volume of 1.5 billion shares. On the Nasdaq, advancers topped decliners two to one on volume of 2.28 billion shares.

Bonds: Treasury prices rose, lowering the yield on the benchmark 10-year note to 2.65% from 2.66% Tuesday. Treasury prices and yields move in opposite directions.

Lending rates were mostly higher. The 3-month Libor rate dipped to 1.18% from 1.19% Tuesday, according to Bloomberg.com. The overnight Libor rate fell to 0.3% from 0.51% Tuesday. Libor is a bank-to-bank lending rate.

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

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

U.S. light crude oil for May delivery settled down $1.27 to $48.39 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery rose $2.70 to settle at $927.70 an ounce.

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