Stocks closed out a tough quarter on a positive note, helped by gains in technology and big banks.
A day after Monday's sound drubbing, the three major indexes rebounded more than one percent.
And for March, the market had its best month in over six years. The Dow Jones Industrial Average rose nearly 8 percent for March, while the S&P 500 gained nearly 8.5 percent and the Nasdaq climbed nearly 11 percent.
But stocks still ended the first quarter with major losses. The Dow lost over 13 percent, while the S&P 500 fell nearly 12 percent. Only the Nasdaq came close to breaking even, falling just over 3 percent for the quqrter..
Despite hopes that the recent stock rally will continue, the outlook for first-quarter earnings season, which begins next week, may be disappointing.
"No one's going to say that anything looks rosy going into earnings season," Steve Grasso, of Stuart Frankel, told CNBC. "But I think going into mark-to-market chatter the shorts will not be brave ahead of that."
Google shares gained after the search engine giant formally announced its venture capital fund, which will be used for investment in industries ranging from biotech to software.
Online retailer Amazon also helped lead the tech charge and was one of the day's most active in options trading.
And Microsoft surged after Davenport upgraded the company to "buy" from "neutral" and set a price target to $24 due to increased demand.
Investors mostly shrugged off separate reports that showed weakness in home prices, consumer confidence and in a purchasing managers index.
The Standard & Poor's Case-Shiller Home Prices Indicesgauge of housing prices was worse than analyst estimates, reflecting an annualized drop of 19 percent, though the numbers were for January and showed a lagging trend.
The news comes the day after home builder Lennar reported a loss of 98 cents a share. Though the loss was not as bad as analysts expected, investors dumped the stock.
But General Motors shares proved one of the biggest drags on the market, falling more than 10 percent as investors remained concerned about what would be left of the stock under the government's bailout plans.
Some of the biggest banking names led the charge in stocks, with Bank of America and Citigroup both posting gains in the 10 percent range.
Positive news from Europe helped set the stage for the gains, as Barclays said it would not take part in a British government asset-protection plan.
Also, shares of HSBC moved higher after the bank reiterated its position that it will not need capital infusions from any government.
But Hartford Financial Services stock continued to deteriorate after Moody's lowered its rating on the firm and cut its senior debt to Baa3. The Hartford's shares are off 91 percent from their 52-week high though they had recovered somewhat from their March 6 lows.
Lincoln Financial was another of the big winners in the group, with its shares soaring after it said it would repay a $500 million debt maturity on time April 6.
Aluminum companies were the markets' leading gainer, with Alcoa surging, while the housing numbers hit home improvement stores such as Home Depot.
Meanwhile, Warren Buffett is set to back break-away banker Byron Trott, who is leaving Goldman Sachs to start his own merchant-banking firm. Buffett told the Wall Street Journal that Berkshire Hathaway is planning to invest in the new company, sending shares higher.
Also, Nokia shares rose on news that it has signed a contract in which China PTAC Communication will buy $1.76 billion in mobile devices from Nokia this year.
Market breadth was strongly positive, with gainers beating losers by nearly 5 to 1 on the New York Stock Exchange. But volume was light, with about 856 million shares changing hands with about 40 minutes left until the market close.
In other markets, oil prices edged lowerto near $48 a barrel; Treasury yields moved higheramid the economic gloom, and the dollar lost groundagainst the euro while the yen also slipped broadly.
WEDNESDAY: Auto sales; weekly mortgage applications; construction spending; ISM manufacturing index; pending-home sales
THURSDAY: ECB announcement; weekly jobless claims; factory orders; Earnings from Rite Aid, RIMM
FRIDAY: March jobs report; ISM services index; Bernanke speaks