US stocks scored robust gains Monday on hopes that political leaders will find a way to avoid the so-called "fiscal cliff" of automatic tax hikes and spending cuts in January.
The Dow Jones Industrial Average was up 155.09 points (1.23 percent) at 12,743.40 after an hour of trade (1530 GMT).
The S&P 500-stock index advanced 19.72 points (1.45 percent) to 1,379.60, while the tech-rich Nasdaq Composite leaped 39.72 (1.39 percent) to 2,892.85.
"Markets are looking to extend Friday's gains on hopes that progress will be made surrounding the fiscal cliff," said Wells Fargo Advisors analysts.
"Investors are encouraged after President Obama said on his trip to Southeast Asia that he believes a budget deal will be reached."
The strong rally began a holiday-shortened week amid news that sales and prices of previously owned homes, the bulk of the housing market, continued to gain, sales rising 2.1 percent in October from September.
On the Nasdaq, shares in Apple, the biggest publicly traded company, surged 4.6 percent, helping to pull up the markets.
Dow member Intel rose 0.4 percent after announcing that chief executive Paul Otellini would retire in May.
Computer networking giant Cisco, which is buying cloud computing specialist Meraki for $1.2 billion, gained 1.0 percent.
Lowe's, the nation's second-largest home improvement retailer, jumped 6.5 percent after posting better-than-expected third-quarter results.
Bank of America added 3.6 percent after an upgrade by Stifel analysts.
JPMorgan Chase climbed 2.2 percent. The bank said Monday it had agreed to pay $297 million to the US Securities and Exchange Commission to settle a dispute over sale of mortgage-backed securities.
Markets will be closed Thursday for the Thanksgiving Day holiday and have shortened sessions on Friday.
Bond prices fell. The 10-year US Treasury yield rose to 1.62 percent from 1.57 percent late Friday, while the 30-year increased to 2.77 percent from 2.72 percent.
Bond prices and yields move inversely.