Last Friday's trade looking good with this market rally

It seems that last Friday's trade is really paying off. The markets keep on marching up once again. When will this rally come to an abrupt stop? Who knows? Anyway, I have no more margin to play with until April's expiration. Here's today's market recap:

U.S. stocks rose as an improved outlook for industrial companies and better-than-estimated data on consumer confidence and home prices overshadowed concern government deficits will derail the economic recovery. 3M Co. rallied 3.6 percent as Morgan Stanley said profit may top estimates after Danaher Corp. boosted its earnings forecast, sending the maker of Craftsman tools up 4.5 percent. Home Depot Inc. and Lowe’s Cos. climbed as the S&P/Case-Shiller index of home prices in 20 U.S. cities and the Conference Board’s confidence gauge topped economists’ estimates.

The Standard & Poor’s 500 Index increased less than 0.1 percent to 1,173.27 at 4:37 p.m. in New York. The Dow Jones Industrial Average increased 11.56 points, or 0.1 percent, to 10,907.42. About 7.3 billion shares changed hands on all U.S. exchanges, 13 percent fewer than the three-month daily average as trading slowed amid the Passover holiday.

“We’re definitely off the bottom,” said Michael Mullaney, who helps manage $9 billion at Fiduciary Trust Co. in Boston. “There’s improvement in confidence and sentiment. People seem to be more comfortable about spending again. We’ll continue to see strength in stocks.”

Benchmark indexes fluctuated earlier after S&P cut Iceland’s credit rating and Greece failed to sell half the 12- year bonds it offered, reigniting concern governments around the world will struggle to finance growing budget deficits.

The Dow closed at an 18-month high after the 20-city home- price index unexpectedly climbed 0.3 percent and the Conference Board’s sentiment gauge rose to 52.5 in March from 46.4 in February.

First-Quarter Rally

The S&P 500 has rallied for the last four weeks, heading for a fourth straight quarterly advance, on speculation the economy is recovering from the worst contraction since the Great Depression. The benchmark index for U.S. stocks has climbed 5.2 percent since Dec. 31, its best first-quarter rally since 1998.

“We expect stocks to deliver at least a 15 percent return over the next 12 months,” said Stanley Nabi, New York-based vice chairman of Silvercrest Asset Management Group, which oversees $8.5 billion. “It obviously won’t be a very strong upturn, but things are getting better.”

Traders attributed part of the market’s gains today and yesterday to “window dressing,” in which investors buy shares of the best-performing companies at the end of the quarter to shore up their portfolios.

Quarter’s End

“It’s just the end of the quarter,” said Mark Bronzo, an Irvington, New York-based money manager at Security Global Investors, which oversees $21 billion. “We’ve had a decent quarter so it’s probably a little bit of window dressing. The economic numbers continue to be a little better and today’s numbers were not an exception.”

U.S. Treasury Secretary Timothy F. Geithner said U.S. employers soon may start hiring again after weathering the worst recession since the Great Depression.

“The economy is getting stronger,” Geithner said yesterday in an interview on CNBC. “We’re probably just on the verge now of what we think will be a sustained period of job creation finally.”

Stocks could rise “another 3 to 5 percent,” Russ Koesterich, the San Francisco-based head of investment strategy for scientific active equities at BlackRock Inc., which manages $3.35 trillion in assets, told Bloomberg Television. “If you want to be aggressive, I wouldn’t get short the market right now. There are a couple of things that are still going to support you -- lower rates, good macro environment and earnings estimates for the first quarter.”

Tech, Industrial Rally

Technology and industrial shares gained in the S&P 500.

3M Co. was the best performer in the Dow, jumping 3.6 percent to $84.28. Shares of the maker of 55,000 products from Post-It Notes to respiratory masks will rise over the next 30 days, Morgan Stanley said.

MEMC Electronic Materials Inc. had the biggest gain in the S&P 500, climbing 5.7 percent to $15.51. The shares rose to the highest price since October and call-option trading increased on speculation the maker of silicon wafers for solar modules and semiconductors may be acquired. Bill Michalek, an MEMC spokesman, said the company doesn’t comment on market speculation.

Danaher Corp. advanced 4.5 percent to $80.88 after increasing its first-quarter profit forecast to 90 cents a share or more. The company previously anticipated earnings at or above the high end of a range of 77 cents to 82 cents. The average estimate of 15 analysts surveyed by Bloomberg was 83 cents.

iPhone

Verizon Communications Inc. rallied 2.6 percent to $31.23, for the second-biggest gain in the Dow. The Wall Street Journal reported Apple Inc. is developing a version of its iPhone that will work over the Verizon Wireless network.

AT&T Inc. has been the exclusive U.S. carrier for the iPhone since its debut in 2007, gaining an advantage over rivals in the smartphone market. An agreement with Apple, which has sold more than 42 million iPhones, would let Verizon Wireless take advantage of rising demand for the device.

AT&T had the biggest decline in the Dow, retreating 2.1 percent to $25.95. Apple gained 1.5 percent to $235.85, a record. Research in Motion Ltd. slipped 1 percent to $74.92.

Financial stocks had the biggest decline in the S&P 500 among 10 industries, falling 0.7 percent. Citigroup Inc. retreated 2.2 percent to $4.09, Goldman Sachs Group Inc. slid 1.5 percent to $171.38 and Bank of America Corp. fell 1.6 percent to $17.76.

Iceland, Greece

The S&P 500 pared gains today after Iceland’s local currency credit ratings were cut by S&P, which cited restrictions triggered by the imposition of capital controls.

Greece’s surprise auction of 5.9 percent bonds maturing October 2022 attracted demand for less than half the debt on offer. The country’s increase of its existing 12-year issue raised 390 million euros ($523 million), compared with an upper limit of 1 billion euros.

“Greek bonds are getting killed,” said David Lutz, managing director of equity trading at Stifel Nicolaus & Co. in Baltimore. “There’s a lot of concern on sovereign debt. People are worried that the situation is not resolved.”

U.S. economic growth may slow in the second half of the year, Nouriel Roubini, the New York University economist who predicted the financial crisis, said in a speech in Mumbai. The U.S. economic recovery will be “U” shaped, Roubini said.

‘Confirmed Breakout’

The S&P 500, heading for its biggest first-quarter gain since 1998, will probably rise 13 percent in the next few months after staging a “confirmed breakout,” says Katie Stockton of MKM Partners.

The benchmark measure of U.S. equities closed above its January high of 1,150.23 for two consecutive weeks on higher- than-average trading volume, after failing to stay above that level in the previous week. That breakout confirms the S&P 500 has entered a new phase of its yearlong rally and may reach 1,325, said Stockton, who boosted her projection from between 1,220 and 1,230.

“The breakout was decisive,” Stockton, chief market technician at Greenwich, Connecticut-based MKM Partners, said in an interview. It indicates “the trend will persist at its current rate,” she added.