The Dow Jones Industrial Average has closed over two per cent up, as markets shook off the deep concerns over Europe's finances that had blighted previous sessions.
The Dow Jones Industrial Average rose 213.88 points (2.10 per cent) to 10,404.77 at the close.
The tech-rich Nasdaq index rose 61.92 points (2.76 per cent) to 2,305.88 and the broad-market S&P 500 index gained 25.60 points (2.35 per cent) at 1,115.23.
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"The tone to trade was positive for the entire session," said analysts at Briefing.com as the rising euro and European bourses bolstered US equities after a late sell-off on Monday that sent the Dow stock index into the red.
"The bulls made a strong run to the upside today, as stocks finished near their highs, erasing yesterday's late-day losses and overcoming some poor domestic economic data," said analysts at Charles Schwab.
Among the winners were the airline sector, with the soon-to-merge Continental Airlines and US Airways leading the pack.
Continental stock rose four per cent and US Airways 3.6 per cent as the airlines predicted better revenues for the remainder of the year.
BP's New York-listed shares were up over two per cent after dipping sharply, as oil industry executives faced a grilling in Congress and Fitch announced a downgrade to its debt rating.
Chevron stock also recovered from steep falls as investors saw minimal immediate damage from the hearings.
Bond prices fell. The yield on the 10-year Treasury bond rose to 3.304 per cent from 3.258 per cent on Monday, while that on the 30-year Treasury bond rose to 4.220 per cent from 4.183 per cent.
Bond prices and yields move in opposite directions.
