The Dow Jones Industrial Average increased 326.15 points, or 1.25 per cent, to 26,362.25 on Thursday. The S&P 500 was up 36.64 points, or 1.27 per cent, to 2,924.58. The Nasdaq Composite Index rose 116.51 points, or 1.48 percent, to 7,973.39, Xinhua news agency reported.
The majority of the 30 blue-chip stocks in the Dow extended gains around market close, with shares of trade-sensitive Caterpillar up over 2.5 per cent, leading the gainers.
Shares of widely-regarded trade barometers Intel and Boeing also rallied 2.36 per cent and 0.77 per cent, respectively, among the best performers in the benchmark tally.
Ten of the 11 primary S&P 500 sectors traded higher around the closing bell, with the energy sector up 1.85 per cent, leading the winners.
Shares of Best Buy tumbled 7.99 per cent, after the US consumer electronics retailer posted lower-than-expected revenues and comparable store sales for the second quarter, despite its decent quarterly profit.
On the economic front, US pending home sales declined in July, down from the previous two consecutive months of gains, said the National Association of Realtors (NAR) on Thursday.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, dropped 2.5 percent to 105.6 last month.
"Economic uncertainty is no doubt holding back some potential demand, but what is desperately needed is more supply of moderately priced homes," said Lawrence Yun, NAR chief economist, in a statement.
The US initial jobless claims increased to 215,000 last week, up 4,000 from the previous week's revised level, the Labour Department said Thursday.
Yet the 4-week moving average, seen as a key metric of labour market conditions, fell to 214,500, a decrease of 500 from the previous week's revised average.
US second-quarter GDP growth was revised to an annualized rate of 2 percent, according to the second estimate released by the Bureau of Economic Analysis on Thursday.
The growth rate was 0.1 per cent point lower than the advance estimate released in July.
( With inputs from IANS )