The Dow Jones Industrial average rose 218 points, or 1.8%, to close at 13,177, which was the highest since Dec .31, 2007.

The Nasdaq also rose 56 points, or 1.9%, to 3,040, which was the highest closing level since November 15, 2000.

One major factor for the rising stocks was the higher than expected retail sales figures. Earlier, it was reported by the Commerce Department that sales climbed a seasonally adjusted 1.1 percent to $407.8 billion last month.

With the labor market continuing to improve, the rising gasoline prices could not do any damage to retail sales. Recent resurgence in motor vehicle sales and in housing activity is encouraging. The recent sustained run of stronger economic data, particularly on the labor market, indicates a possible GDP growth of 2 percent this year.

The rise in stock value was instigated by the banks among which JP Morgan Chase & Co witnessed a climb by 7 percent to $43.39. It had announced that it was increasing its dividend and also about the $15 billion stock-buyback program.

In addition, Bank of America Corp climbed by 6.3 percent to $8.49. Goldman Sachs Group jumped 6.5 percent to 124.54, Citigroup increased 6.3 percent to 36.45, and Wells Fargo rose 5.8 percent to 33.33.

The shares of Apple rose to $568.10, which was a jump by 2 percent.