Traders couldn't get enough of Wall Street

By the close, the blue-chip Dow Jones index had leapt more than 2.2%, or 201.84 points, to 9,318.96, its best close since 5 July 2002, with every one of its 30 constituent shares showing a gain.

The Standard & Poor's 500 index, a much broader index of stock performance, climbed 2.24% or 22.15 points to 1,010.76, almost its best showing for a year.

And the technology-heavy Nasdaq Composite shot up 2.51% to 1,667.32.

Bull run

We're at the point where economic data... will be viewed through rose-coloured glasses Andrew Baker senior trader, Wedbush Morgan

Investors have now been pushing the market higher for more than three months, failing to be put off for more than a day or two by negative news such as consumer spending slowdowns and unemployment spiralling upwards.

Monday's figures from the New York Federal Reserve simply added fuel to the fire, as the measure of factory activity in the state was better than at any point in its two-year history.

The betting, observers said, is now on a recovery in the second half of the year - aided by expectations that US interest rates will next week follow in the footsteps of the cut made by Europe's central bank earlier this month.

"We're at the point where economic data, no matter what comes out between now and next Tuesday, will be viewed through rose-coloured glasses," said Andrew Baker, senior trader at Los Angeles firm Wedbush Morgan.

"Weaker data can be interpreted as a higher chance of a rate cut, which is good for the market and the economy, and better economic data will signify the economy is turning around."

Big gains

The biggest gainer on the Dow Jones index was Pfizer, up almost 5% after it said its anti-cholesterol drug Lipitor reduced the likelihood of strokes and heart attacks in diabetic people.

Meanwhile, the Nasdaq was led by discount retailer Kmart, whose first results since coming out of bankruptcy earlier this year showed a near-$900m loss.

That was almost 40% lower than the loss the year before, and its shares - which are held by only a few people in the wake of the court-ordered restructuring - leapt 21.6%.