Bumper day on Wall Street pushes Dow toward 12,000

"The major equity averages are up with strong gains after stumbling in the early going," said Briefing.com analysts.

The blue-chip Dow Jones Industrial Average rose 108.68 points (0.92 per cent) to 11,980.52 by closing trades, while the broad-market S&P 500 index rose 7.49 points (0.58 per cent) to 1,290.84

Meanwhile the tech-rich Nasdaq did even better, rising 28.01 points (1.04 percent) to 2,717.55, as Intel shares rose over two percent. Fellow tech giant IBM saw its shares rise 2.7 per cent.

US bellwether stocks were among those also posting the most gains, with Caterpillar rising almost two percent, General Electric up 1.5 per cent and 3M up 1.2 per cent.

Major US airlines also led the market gains.

Delta Air Lines were up 4.2 per cent, United Continental rose 1.6 per cent, and the holding company for American Airlines rose 0.8 per cent.

But banking shares were not able to capitalize on upward momentum.

Bank of America shares were down 2.3 per cent and Citigroup fell 0.6 per cent after the US Treasury announced it would sell most of the government's remaining share in the company.

The market had been listless early in the session, as traders awaited a raft of key economic data later in the week.

First up on this week's docket will be the meeting of the Federal Reserve's interest rate-setting panel on Tuesday and Wednesday.

While the panel is not expected to raise interest rates from current ultra-low levels, it could raise growth forecasts for this year toward the upper end of a three-to-four percent band.

President Barack Obama's State of the Union Address on Tuesday and the final tranche of 2010 gross domestic product figures on Friday could also steer the market.

The bond market extended its rise from Friday. The 10-year Treasury yielded 3.408 per cent versus 3.416 per cent, while the 30-year Treasury fell to 4.558 per cent against 4.574 per cent.

Bond prices and yields move in opposite directions.