Share prices soared after the US Federal Reserve unexpectedly cut interest rates for the fourth time this year to revitalise the sluggish US economy.
The Fed's action sparked a frantic buying frenzy that pushed major market gauges to their highest levels in more than a month.
Traders were caught off guard by the half-percentage point reduction in the Fed's key short-term interest rates which occurred between scheduled meetings of the powerful central bank's policy-making committee.
The technology-laced Nasdaq Index surged 156.22 points, or 8.12 per cent, to 2,079.44, the fourth-biggest gain in its 30-year history.
The blue-chip Dow Jones jumped 399.10 points or 3.91 per cent to 10,615.83. The broader S&P 500 Index climbed 46.35 points or 3.89 per cent to 1,238.16.
After the closing bell technology stocks extended their gains, lifted by a flood of positive earnings news from high-tech bellwethers like IBM and Apple Computer.
AOL Time Warner, the world's largest Internet and media company, added more fuel to the rally. It bucked the recent industry trend of gloomy results by reporting higher quarterly earnings. The stock climbed $5.10 to $49.