Wall Street enjoyed a modest rebound yesterday after three weeks of losses, advancing as investors felt more optimistic about the economy and indulged in a little bargain hunting. Falling oil prices and a strengthening dollar also spurred buying.

While Dow Jones industrial General Motors Corporation suffered from a new round of bad news, an $11.3 billion leveraged buyout of SunGard Data Systems Incorporated showed that the recent wave of merger and acquisition activity would continue, and American International Group Incorporated rebounded even as probes into its business practices continued.

The economy, however, was foremost on investors’ minds. There was no significant economic data released yesterday, so the market was anxiously awaiting gross domestic product and employment numbers later in the week and hoping they would show the economy has enough strength to overcome inflation.

“Investors are cautiously putting a foot back into the market,” said the chief market strategist at Spencer Clarke LLC, Michael Sheldon. “The market appears to be oversold, but investors are going to need some sort of catalyst, whether it’s falling oil prices or earnings or some of the economic data coming out this week, to really have the confidence to push things higher.”

The Dow Jones industrial average rose 42.78, or 0.41%, to 10,485.65. The Dow has fallen more than 1% in each of the last three weeks.

Broader stock indicators also gained ground. The Standard & Poor’s 500 index was up 2.86, or 0.24%, at 1,174.28, and the Nasdaq composite index climbed 1.46, or 0.07%, to 1,992.52.

Investors were also cheered as the dollar gained ground against most major currencies, including the euro and the Japanese yen. Crude oil futures continued their slow retreat, with a barrel of light crude settling at $54.05, down 79 cents, on the New York Mercantile Exchange.

Bonds continued their slide, with the yield on the 10-year Treasury note rising to 4.64%, up from 4.59% late Thursday. Gold prices fell as the dollar gained strength.

Analysts noted that yesterday’s move up came on very light volume, and the advance-decline lines showed decliners slightly ahead. And while the energy sector continued to lead the market for 2005, it was the worst performer of the month so far, despite record crude oil prices.

“Take that into consideration and you’re looking at a very short-term, leaderless kind of selling reprieve, more than anything else,” said a market strategist at Piper Jaffray, Brian Belski. “People aren’t jumping up and down to get back in to this market. They’re going to want to see a few days of solid upside and some real leadership from any sector, really, before they get back in.”

SunGard Data Systems Incorporated rose $2.81, or 8.9%, to $34.36, after the company announced it would be purchased by a consortium of seven private equity groups. The move was expected, though the $5 premium over Thursday’s closing stock price was not.

GM was downgraded to “reduce” from “neutral” by UBS due to concerns over the automaker’s liquidity and questions about whether the company could continue offering dividends to its shareholders. GM slipped 93 cents to $28.37.

American International Group climbed $1.41 to $57.02 after The Wall Street Journal reported online that the company would sever ties with its former chairman, Maurice “Hank” Greenberg.

Pharmaceutical services company AmerisourceBergen Corporation tumbled $7.08, or 11.6%, to $54.03, after it lowered its earnings forecasts for the quarter and the year. The company blamed lower inventory levels maintained by its customers for the expected shortfalls.

Drugstore chain Walgreen saw its sales rise 12.5% for its second quarter, but the company missed Wall Street’s profit forecasts by a penny per share. Walgreen lost $1.12 to $45.11.

Declining issues outnumbered advancers by nearly 4 to 3 on the New York Stock Exchange, where preliminary consolidated volume came to 1.72 billion shares, compared to 1.73 billion traded on Thursday. The stock market was closed on Good Friday.

The Russell 2000 index of smaller companies was down 0.15, or 0.02%, at 615.12. Overseas, Japan’s Nikkei stock average rose 0.27%. European markets were closed for the Easter holiday.