Stocks extended gains on Wednesday after factory and home sales data further spurred hopes that the economy was seeing signs of stabilization.

Shares of big manufacturer Caterpillar Inc led the Dow higher after data showed factory activity in March fell at a slower rate than the month before. Home builders <.DJUSHB> also gained after pending sales of existing homes rose in February.

The Dow Jones industrial average <.DJI> gained 160.73 points, or 2.11 percent, to 7,769.65. The Standard & Poor's 500 Index <.SPX> rose 14.09 points, or 1.77 percent, to 811.96. The Nasdaq Composite Index <.IXIC> put on 22.64 points, or 1.48 percent, to 1,551.23.

(Reporting by Leah Schnurr; Editing by James Dalgleish)