US STOCKS-Wall St extends gains ahead of Friday's payrolls data
* Volatility expected before Friday's payroll report
* Fed's Dudley to speak about national economic conditions
* Ford Motor shares rise after June car sales data
* Dow up 0.3 pct, S&P 500 up 0.4 pct, Nasdaq up 0.3 pct
(Updates to midday)
NEW YORK, July 2 (Reuters) - U.S. stocks rose for a second day on Tuesday, helped by strong June car sales, while concerns receded about the Federal Reserve's plans to pare its massive bond-buying program.
Shares of automakers Ford Motor Co and rival General Motors rose after the companies reported strong sales last month. Ford said the overall U.S. auto industry will report its best monthly sales rate since December 2007. 1/2ID:nL2N0F80EL 3/8
Ford's stock advanced 1.8 percent to $16.02 after the automaker said June U.S. car sales rose 13.4 percent. Shares of GM added 0.6 percent to $34.21. Both stocks were less than 1 percent away from 52-week highs.
Nine of the 10 S&P 500 industry sector indexes were higher, led by advances in energy, financials and tech. SW Energy Co and Baker Hughes Inc ranked among the S&P 500's biggest gainers.
Trading probably will be light this week, with U.S. markets closing early on Wednesday and all of Thursday for Independence Day. The lower volume and shortened week could limit gains until the government's release of the June non-farm payrolls report on Friday. Economists have forecast an increase of 165,000 jobs.
"We're finally getting a breath of fresh air, some relief, after two weeks of taper drama," said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago.
"I think a lot of leverage is out of the Street, a lot of speculation is out of the market, and I think it's going to be quiet until we get to the unemployment number on Friday."
The Dow Jones industrial average was up 39.60 points, or 0.26 percent, at 15,014.56. The Standard & Poor's 500 Index was up 5.91 points, or 0.37 percent, at 1,620.87. The Nasdaq Composite Index was up 10.78 points, or 0.31 percent, at 3,445.27.
Volatility jumped two weeks ago after the Fed said it expected to reduce its $85 billion a month of bond buying that has helped drive the U.S. stock market's rally this year. Since those comments, several Fed officials have said the central bank would not bring an imminent end to its monetary stimulus, helping stabilize the market.
William Dudley, president of the New York Fed, will speak at 12:30 p.m. (1630 GMT) about national economic conditions. His comments will be scrutinized for clues on when the Fed will begin to scale back its quantitative easing.
Stocks surged in the first five months of the year, then slid in June on concerns that the Fed would begin reining in its $85 billion in monthly bond purchases. The S&P 500 is about 3 percent below its May 21 record closing high of 1,669.16.
Shares of alcoholic beverage company Constellation Brands Inc fell 2.8 percent to $51.66 after its first-quarter earnings and revenue missed expectations.
Sources said Pfizer Inc and Novartis AG may make preliminary bids for Onyx Pharmaceuticals Inc. On Sunday, Onyx turned down a roughly $10 billion offer from Amgen Inc.
Onyx jumped 2.4 percent to $134.50, after gaining more than 50 percent in Monday's session.
Zynga Inc shares rose 8.8 percent to $3.34 after the company named Don Mattrick, the head of Microsoft's Xbox business, its chief executive.
(Reporting by Alison Griswold; Additional reporting by Ryan Vlastelica; Editing by Jan Paschal)