The Dow Jones industrial average jumped 65.84 to 5,594.75.
Advancing issues outnumbered decliners by nearly an 11-to-3 margin on the New York Stock Exchange, with 1,944 up, 538 down and 685 unchanged.
NYSE volume totaled 438.94 million shares vs. 402.52 million in the previous session.
Broad-market measures also rallied with the bond market after a July survey of industrial purchasing managers revealed weaker-than-expected growth in the manufacturing sector.
The NYSE composite index rose 5.08 to 347.78, and the S&P 500-stock index advanced 10.06 to 650.01. The Nasdaq composite rose 18.22 to 1,098.81, and the Amex market value index gained 4.62 to end the day at 544.12.
The purchasing managers report suggested to stock and bond investors that growth remains at modest levels not likely to aggravate inflation and prompt the Federal Reserve to raise its lending rates to slow the nation's consumer and corporate business activity.
After the report, long-term bond prices shot higher, pushing the yield on the 30-year Treasury down to 6.83 percent, the lowest level since late May.
But despite the enthusiasm over the data, investors were awaiting tomorrow's release of the July employment report, the first broad look at the economy in the current quarter.