Updated from 9:58 a.m. EDT

Stocks were moderately higher heading into midday Wednesday as a homebuilding deal and a lifeline to life insurers helped offset a poor showing from Alcoa ( AA) and jitters about corporate earnings.

The Dow Jones Industrial Average was climbing 36 points to 7826, and the S&P 500 was adding 7 points to 822. The Nasdaq was up 24 points to 1585.

American Express ( AXP) was leading the Dow with a 4.4% increase, while Microsoft ( MSFT) and Home Depot ( HD) were rising 2% to 3%.

Alcoa began the quarterly earnings season after the prior close by slightly missing analysts' bottom-line expectations. The aluminum maker said first-revenue was down 27% from the fourth quarter and 36% from a year prior owing to falling aluminum prices and the weak economy.

While Alcoa's earnings release marks the traditional start of earnings season, the real litmus test will be the banks, which will likely drive the market one direction or the other, says Brian Bethune, chief U.S. financial economist at IHS Global Insight.

Diverting attention from worries about quarterly numbers, Pulte Homes ( PHM) said it has agreed to buy Centex ( CTX) for $1.3 billion. The deal, which will create the nation's largest homebuilding company , and launched Centex shares 21% higher.

"Given there's a lot of overcapacity, I wouldn't be surprised if the whole sector consolidates," says Bethune. "This is one of the problems you get into as the recession continues. The excess capacity in various industries forces mergers in banking, housing and automotive, for instance."

The market, which has rallied for four weeks, has run into a number of doubters in recent days. Calyon analyst Michael Mayo warned that the underlying situation hasn't changed for banks. Then investors George Soros and Marc Faber cautioned that the market could be set for a pullback. Finally, famously bearish Nouriel Roubini, a business professor at New York University, said he expects bleak macroeconomic data and problems in the banking and housing sectors to continue.

Helping matters a bit this time was news from the Mortgage Bankers Association that its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, increased 4.7% for the week ended April 3.

Separately, the Commerce Department reported that U.S. wholesale inventories fell a record 1.5% in February, the six straight month of decline, while sales increased 0.6%. The change in inventory was more than twice the anticipated drop.

"The decline nonetheless represents progress and U.S. companies have calibrated their output sufficiently to the new, lower levels of demand," writes Tony Crescenzi, chief bond strategist at Miller Tabak and a RealMoney.com contributor.

Life insurers got a boost on news that the U.S. government is widening the window of companies that qualify for aid during the continuing recession. The Treasury Department will open the Troubled Asset Relief Program to several qualifying life insurers , according to a report from The Wall Street Journal .

Prudential Financial ( PRU) was rising nearly 13%, Hartford Financial Services ( HIG) surged 31%, and Lincoln National ( LNC) climbed 33% on that news.

Meanwhile in tech, electronics maker Spansion ( SPSN), which has filed for bankruptcy protection, will receive $70 million in a settlement of patent lawsuits with Samsung. Spansion's shares surged 189%, albeit that was only 25 cents to 39 cents.

The Securities and Exchange Commission put five approaches to the uptick rule concept up for a 60-day comment period.

Later in the day, the Federal Reserve will release more details on the state of the economy with the minutes of its March meeting.

Oil was rising $1.22 a barrel, and gold was up $4.70 to $888 an ounce.

Longer-dated Treasuries were higher. The 10-year was up 8/32 to yield 2.9%, and the 30-year was adding 24/32 and yielding 3.7%. The dollar was recently weaker against the yen, but stronger vs. the pound and euro.

Stocks overseas were mixed. In Europe, London's FTSE 100 and Frankfurt's Dax were rising, while stocks in Asia ended their session weaker, with the Nikkei 225 losing 2.7% and the Hang Seng in Hong Kong down 3%.

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