By Greg Peel

The Dow rose 160 points or 1.2% while the S&P gained 1.4% to 1416 and the Nasdaq added 1.8%.

There's nothing like bad news to get a stock market really fired up, is there? And that seems to have been the way of things since the GFC first ushered in QE1 in March 2009. The worse things get, the better it is, because Uncle Ben will just keep handing out the lollies.

Last night Fed chairman Ben Bernanke made a speech in Washington which was concluding as the opening bell rang on Wall Street. In the speech he queried the recent improvement in US employment and suggested the reduction from recession unemployment rates in the double digits to 8.3% now was likely only representative of the lay-offs occurring in that recession being reversed.

"To the extent that this reversal has been completed," Bernanke suggested, "further significant improvements in the unemployment rate will likely require a more-rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies."

So what exactly are "continued accommodative policies"? Zero rates out to 2014? Ongoing rollover of the QE2 balance sheet via Operation Twist? Or ongoing rounds of fresh quantitative easing? If you answered C, then you are among those on Wall Street last night who thought QE3 was gone but is now back on the table again.

We recall that when Bernanke left QE3 talk out of his rhetoric for the first time a couple of weeks ago, the Dow fell 200 points. Last night's 160 point gain might thus be seen as simply a prodigal reversal. But the Wall Street indices are now all well up above those psychological levels once more and if the quarter closed today, it would be the best March quarter since 1998.

As I noted yesterday, with the quarter ending on Friday we're probably in for a week of non-data related battles between the profit-takers and the window-dressers. In the meantime, US pending homes sales surprisingly fell 0.5% in February to again drive home the reality that there's no point in trying to call the trough in US housing. The Chicago Fed national activity index also saw a drop, to minus 0.09 from 0.33 in January. This result nevertheless indicates a pullback from strong economic growth to more average economic growth (zero being average).

There was also good news from across the pond, where Germany's IFO business climate index rose to 109.8 this month from 109.7 last month. Not exactly champagne stuff, but given the recent weak PMI results in the eurozone economists had worried