Data pointing to stabilization in the U.S. labor market gave the market a further boost, along with a broker upgrade of bellwether 3M Co , whose stock rose 2.1 percent.
China, the world's top base metals consumer, reported a jump in lending and slower inflation, suggesting the economy is on track for growth. Caterpillar Inc , a big mining equipment maker, rose 5.6 percent to $56.15 and provided the biggest boost to the Dow industrials.
But the biggest driver in the nearly 1 percent rise on the day was the European Union pledge to support Greece. Investors saw an EU bid to avert fallout from fiscal troubles in Greece and other European single currency countries like Portugal and Spain.
They moved everything up on more of a posture by the EU to come up with something creative on Greece as opposed to not knowing what to do, said Stephen Carl, principal and head of U.S. Equity Trading at the Williams Capital Group in New York.
It looks like they are putting things in place and the market is reacting favorably just because there is a plan. Let's see how they implement it.
The Dow Jones industrial average <.DJI> rose 105.81 points, or 1.05 percent, to 10,144.19. The Standard & Poor's 500 Index <.SPX> gained 10.34 points, or 0.97 percent, to 1,078.47. The Nasdaq Composite Index <.IXIC> added 29.54 points, or 1.38 percent, at 2,177.41.
Before the bell a government report showed applications for jobless insurance fell more than expected in the latest week, a signal the labor market continues to mend.
Shares of 3M Co, a diversified manufacturer, rose 2.1 percent to $80.27 after Sanford C. Bernstein upgraded the company to outperform from market-perform, citing better margins and a higher growth rate.
Among commodity related names, Alcoa Inc jumped 3.2 percent to $13.58, while U.S. Steel Corp jumped 6 percent to $47.01 and Newmont Mining rose 3.2 percent to $46.76. The S&P materials index <.GSPM> rose 1.6 percent.
On the Nasdaq, shares of video game publisher Activision Blizzard Inc jumped 9.6 percent to $11.07 after the company posted better-than-expected results and said it would start paying an annual dividend.
Shares of Philip Morris International Inc , a cigarette maker, jumped 4 percent to $48.67 after the company posted a stronger-than-expected fourth-quarter profit and announced a $12 billion share repurchase plan.
European leaders are keen to prevent Greece's problems spreading to other highly-indebted or high-deficit members of the euro zone, a development that could plunge the 16-nation bloc into a deeper debt crisis.
With the S&P 500 falling more than 7 percent from its 15-month closing peak of January 19 in recent days, investors had been looking for a major catalyst to spur a search for beaten-down stocks. Indeed, some of the day's best performers were some of the market's worst laggards in the past three weeks -- including technology, materials and energy sectors.
The S&P 500 is now only up 59.4 percent since its March 2009 bottom after having pulled back from a run-up of 70 percent since that significant low.
(Reporting by Ellis Mnyandu; Editing by Andrew Hay)