Stocks jumped on Tuesday as an unexpected surge in February housing starts gave investors a rare bit of good economic news, and an upbeat broker comment on bellwether Cisco Systems drove technology shares sharply higher.

A nearly 4 percent rise in U.S. crude oil futures boosted energy shares. Exxon Mobil shares rose 2.1 percent to $68.34 and ranked as the Dow's top gainer.

Retailer Home Depot's stock was also among the Dow's major advancers, rising 5.5 percent to $21.25 after a brokerage raised its view on the stock and several other retailers to buy.

The Dow Jones home construction index <.DJUSHB> rose 4.5 percent after data showed housing starts jumped 22.2 percent in February, the biggest percentage rise since January 1990, and also the first increase since last April.

Among home builders' stocks, top gainers included Ryland Group , up 6.1 percent at $15.04, and KB Home , up 7 percent at $10.88.

Optimism about the banking sector has helped the market

rebound from 12-year lows hit earlier this month. JPMorgan shares rose 4.6 percent to $24.15. An S&P financial sector index <.GSPF> gained 2 percent.

The bears are no longer in control, said Carl Birkelbach, head of Birkelbach Management in Chicago.

It seems the stimulus package and bank rescue plan are going to have an effect. On a long-term basis, the crisis has been averted.

Even though the Obama administration has yet to detail how toxic assets will be taken off balance sheets, optimism about banks has risen in recent days as executives talked of a strong start to 2009.

The Dow Jones industrial average <.DJI> rose 80.92 points, or 1.12 percent, to 7,297.89. The Standard & Poor's 500 Index <.SPX> climbed 11.29 points, or 1.50 percent, to 765.18. The Nasdaq Composite Index <.IXIC> added 27.73 points, or 1.98 percent, to 1,431.75.

(Editing by Jan Paschal)