Wall Street climbed overnight bolstered by better-than-expected corporate earnings including from Facebook and upbeat US economic data.
American GDP expanded at a 3.2 per cent annual pace in the fourth quarter of 2013, according to Commerce Department data, following a 4.1 per cent gain in the third quarter. Consumer spending climbed 3.3 per cent.
"The economy was firing on almost all cylinders as 2013 came to a close. For today, the sun is out and shining," Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York, told Reuters.
Some believe the US Federal Reserve might have to consider accelerating the tapering of its bond-buying program because of the economy's strength. Yesterday the Fed announced it would downgrade its monthly bond purchases by US$10 billion to US$65 billion, as was widely expected.
Still, not all US economic data were rock solid.
Separately, jobless claims rose more than expected, rising 19,000 to 348,000 in the period ended January 25.
The National Association of Realtors' gauge of pending home sales sank 8.7 per cent in December, following a revised 0.3 per cent slide in November that was initially reported as a gain.
"Unusually disruptive weather across large stretches of the country in December forced people indoors and prevented some buyers from looking at homes or making offers," Lawrence Yun, NAR chief economist, said in a statement.
"Home prices rising faster than income is also giving pause to some potential buyers, while at the same time a lack of inventory means insufficient choice. Although it could take several months for us to get a clearer read on market momentum, job growth and pent-up demand are positive factors," Yun said.
In afternoon trading in New York, the Dow Jones Industrial Average climbed 1.03 per cent, the Standard & Poor's 500 Index added 1.24 per cent, while the Nasdaq Composite Index rallied 1.98 per cent.
Advances in shares of Walt Disney, last up 3.1 per cent, those of Nike, last up 3 per cent, led the gain in the Dow.
Shares of Facebook soared, last up 15.7 per cent, after the company posted stronger-than-expected revenue in the latest quarter as mobile advertising accounted for more than half of its advertising revenue.
"Mobile is so key for them," Laurence Balter, an analyst at Oracle Investment Research who has a hold rating on the stock, told Bloomberg News. "It's going to be a big battle between Facebook and Twitter, and it's Facebook's game to lose."
Shares of Visa rose, last up 2.6 per cent, as the company reported quarterly profit that surpassed expectations.
Shares of Google gained, last up 2.9 per cent, after Lenovo Group agreed to buy its Motorola Mobility phone unit for US$2.91 billion.
In Europe, the Stoxx 600 Index ended the session with a 0.3 per cent increase from the previous close. Germany's DAX gained 0.4 per cent and France's CAC 40 rose 0.6 per cent. The UK's FTSE 100 fell 0.1 per cent.