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Stocks Kick Off Second Quarter With Gains

Monday, 2 Apr 2012 | 5:09 PM ET

Stocks kicked off the first trading day of the month and quarter with a modest gain, after better-than-expected manufacturing reports from U.S. and China helped calm renewed concerns over a recession in the euro zone.

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NASDAQ
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S&P 500
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The Dow Jones Industrial Average gained 52.45 points, or 0.40 percent, to end at 13,264.49, led by BofA and Alcoa .

The S&P 500 rose 10.43 points, or 0.74 percent, to finish at 1,418.90, after briefly touching a multi-year high in intraday trading. The Nasdaq rallied 28.13 points, or 0.91 percent, to close at 3,119.70.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, closed above 15.

All 10 S&P sectors logged gains, led by materials and techs.

U.S. stocks closed out their strongest quarter in 14 years, with the S&P 500 posting a gain of 12 percent, thanks to gains in financials and techs.

Despite worries over a pullback following the stellar runup, Ryan Detrick, senior technical strategists at Schaeffer's Investment Research said equities have further room to run and held his year-end target for the S&P 500 at 1,525.

“Historically, April has been a great month in the last five years,” noted Detrick. “So from a seasonal point of view, we’re entering a bullish time frame…and the next driver is going to be earnings season.”

Detrick also said he is encouraged by the economic improvement in the U.S.

“There’s still some concern on the economy, but we’re definitely seeing strong manufacturing, pulse in housing, better jobs reports…which should all translate into higher equity prices," he said. “European issues are still present, but so far, the U.S. has decoupled from Europe.”

On the economic front, the manufacturing index gained more than expectedto 53.4 in March, according to the Institute for Supply Management's manufacturing index.

But construction spending in February fell 1.1 percent, posting its largest drop in seven months, according to the Commerce Department.

Talking Numbers: S&P Due for a Correction?
Discussing the rally in the S&P 500 and whether it will continue, with Carter Worth, Oppenheimer Asset Mgmt. chief market technician. It has been 15 weeks since a correction of 4 percent or greater in the S&P.

The euro zone's manufacturing sector declined for an eighth monthand at a faster pace in March, adding further concern that the region may be in a recession as the downturn may quickly spread to France and Germany. Adding to woes, the unemployment rate in the euro zone hit its highest level in almost 15 years.

Meanwhile, upbeat manufacturing data from Chinaeased concerns of a hard landing in the world’s second largest economy.

Among financials, BofA, Goldman Sachs , JPMorgan and Morgan Stanley gained after UBS raised its price targets on the major banks. Citigroup also lifted its price target on JPMorgan.

Meanwhile, Goldman Sachs is looking to launch a $3 billion property debt fundto provide loans to property investors that would target riskier, but higher-yielding investments, according to a report.

Also among financials, Ambac Financial sued JPMorgan to recover losses on mortgage securities that it insured and were made by the former Bear Stearns.

Among techs, small brokerage firm Topeka Capital Markets placed a $1,001 price target on Apple shares , becoming the first to top the $1,000 forecast barrieron the tech giant. This comes after Apple hit its all-time high of $621.45 reached last week.

Groupon tumbled after the daily-deals site reduced its revenue for the fourth quarter due to customer returns.

On the M&A front, beauty company Coty launched a $10 billion bid for Avon , the struggling mail-order cosmestics company. But Avon rejected the offer, saying it undervalued the company.

And Express Scripts gained after the pharmacy benefit management service provider said it completed its $29.1 billion purchase of Medco Health .

Federal Reserve hawk Minneapolis Fed President Narayana Kocherlakota said on Saturday that inflation in the U.S. was likely to be above the 2 percent target next year.

The stock market will be closed for Good Friday, which could create lighter volume and increase volatility throughout the week. Still, the monthly government non-farm payroll report is expected to be released Friday.

—Follow JeeYeon Park on Twitter: @JeeYeonParkCNBC

Coming Up This Week:

TUESDAY: Factory orders, FOMC minutes, Fed's Williams speaks, auto sales, DC/Maryland/Wisconsin primaries
WEDNESDAY: Weekly mortgage apps, Challenger job-cut report, ADP employment report, ISM non-mfg index, oil inventories, Fed's Williams speaks, JPMorgan's annual letter to shareholders released; Earnings from Monsanto, Bed Bath & Beyond
THURSDAY: Jobless claims, Fed's Bullard speaks, chain-store sales, Yahoo board members' 1st day; Earnings from CarMax
FRIDAY: Good Friday—markets closed/banks open, non-farm payrolls, consumer credit

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