US stocks extended gains on Wednesday after better than expected economic data fueled hopes of economic recovery.

The Dow Jones Industrial Average rose 152.68 points or 2.01% to finish at 7,761.60. The S&P 500 increased 13.21 points or 1.66% to end at 811.08. The Nasdaq Composite climbed 23.01 points or 1.51% to 1,551.60.

The Institute for Supply Management said its index of manufacturing activity rose to 36.3 in March from 35.8 in February. Economists had forecast a reading of 36.

Housing data indicated that the market may have finally found a bottom. According to Commerce Department, U.S. construction spending slipped 0.9 percent to a seasonally adjusted annual rate of $967.5 billion in February, the lowest since March 2004. Economists had expected a decline of 1.9% in construction spending.

A release by National Association of Realtors showed that pending home sales rose a seasonally adjusted 2.1%, in line with expectations, to 82.1 in February.

According to the Mortgage Bankers Association, the volume of mortgage applications filed last week rose by a seasonally adjusted 3% from the week before.

However, job market still remains shaky. ADP survey on Wednesday reported that a total of 742,000 private-sector jobs were lost in March, worse than the forecast of 663,000.

Financial stocks rallied. Citigroup (NYSE:C) surged 15 cents or 5.93% to $2.68. Bank of America (NYSE: BAC) increased 23 cents or 3.37% to $7.05.  JP Morgan (NYSE: JPM) climbed $1.56 or 5.87% to $28.14. American Express (NYSE: AXP) jumped 99 cents or 7.26% to end at $14.44.

Shares of Alcoa (NYSE: AA) rallied 26 cents or 3.54% to $7.60. Caterpillar (NYSE: CAT) rose $1.03 or 3.68% to $28.99.

Among technology stocks, shares of Microsoft (NASDAQ: MSFT) jumped 94 cents or 5.12% to $19.31.

Energy stocks finished up. Exxon Mobil (NYSE: XOM) rose $1.13 or 1.66% to $69.23.
Chevron Corp. added $1.06 or 1.58% to end at $68.30.

Embattled automaker General Motors Corp. (NYSE: GM) on Wednesday reported a 45% drop auto sales for March in the U.S. market. GM finished at $1.93, down 1 cent or 0.52%. Shares of the company were hammered in morning session after a Bloomberg report said that President Barack Obama believes that a quick bankruptcy is the most likely way to restructure ailing automaker into a competitive company.

Ford (NYSE: F) rose 11 cents or 4.18% to $2.74.The second largest automaker reported a 41% plunge in U.S. sales for March. However, sales surged 32% from February and topped consensus estimates.

Biopharmaceutical company Celgene Corp. (NASDAQ: CELG) plunged $5.93 or 13.36% to $38.47 after it said that first-quarter and full-year profit and sales would miss Wall Street expectations. The company said it expects first-quarter earnings per share for 2009, adjusted for items, to increase about 20% from the year-ago period.

Late on Tuesday, Apollo Group Inc. (NASDAQ: APOL) announced that it swung to second quarter net income of $125.3 million, or 77 cents a share, compared to a net loss of $32 million, or 19 cents a share, in the year ago period. Revenue jumped to $876.1 million from $693.6 million. Shares of the company tumbled $11.87 or 15.15% to $66.46.

Borders Group Inc. (NYSE: BGP) soared 29 cents or 46.03% to $0.92 after it reported that its fourth-quarter net income plunged 54% to $28.9 million or $0.48 a share, from $67.3 million, or $1.14 a share, in the prior year quarter. On an adjusted basis, Borders Group registered fourth-quarter income of $63.8 million or $1.05 a share, compared to $74.3 million, or $1.26 a share, in the comparable quarter last year. Revenue dropped 14% to $1.09 billion.

European stocks settled higher. The U.K. FTSE advanced 29.47 points or 0.75% to 3,955.61. The German DAX and French CAC increased 1.13% and 1.16% respectively.

Asian stocks finished mixed. The Nikkei 225 rose 242.38 points or 2.99% to 8,351.91. The Hang Seng index of Hong Kong fell 56.48 points or 0.42% to 13,519.54.

NYMEX crude oil for May delivery declined $1.27, or 2.6% to $48.39 a barrel.
 
Disclosure: Author does not own any of the stocks discussed here.