The Dow Jones Industrial Average rose 151.65 points (1.99 per cent) at the closing bell to 7,760.57, a day after the blue chip index closed March with a 7.7 per cent gain, the best percentage monthly performance since October 2002.
The broad-market Standard & Poor's 500 index, which advanced 8.5 per cent in March to post the stock market's first monthly gain in eight months, climbed 12.92 points (1.62 per cent) to a preliminary close of 810.79.
The market opened sharply lower overnight - with the Dow down almost 125 points in the early going - after payrolls firm ADP data showed a more than expected 742,000 jobs lost in the private sector in March amid prolonged recession. Analysts had forecast 663,000 job losses.
But investors breathed easier after other economic data flowed in.
The Institute of Supply Management manufacturing index for March came in at 36.3 per cent, which is essentially in line with the expected reading of 36.0, and up from the February reading of 35.8.
"The ISM manufacturing index improved by a larger margin than the Street expected, providing the bulls sustenance, which also helped stocks in Europe erase losses and close in positive territory," analysts at Charles Schwab & Co wrote to clients.
"One should be careful, though, not to interpret the ISM as distinctly good economic news. It isn't, but it does show things aren't getting worse in a meaningful way," analysts at Briefing.com cautioned.
In other data released overnight, construction spending for February decreased 0.9 per cent month-over-month.
It was expected to decline 1.9 per cent after a 3.5 per cent monthly drop in January.
January's decline was revised from an initial 3.3 per cent decline.
Pending home sales for February were up 2.1 per cent from the prior month.
They were expected to remain unchanged after declining 7.7 per cent in January.
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