Stocks got a boost after a report that Germany's government would be prepared to ditch its balanced budget rule and take on new debt to counter a possible recession.
"Germany is now telling us that we are going to have to move forward and spend at a deficit in an effort to keep our economy and the broader economy afloat," said Yousef Abbasi, global market strategist at INTL FCStone Financial Inc in New York.
Earlier, China's state planner said it would roll out a plan to boost disposable income this year and in 2020 to spur consumption as the economy slows.
Traders are betting on a one-in-five chance of a 50 basis point interest rate cut from the Federal Reserve, while expecting aggressive easing from the European Central Bank at its policy meetings in September.
However, the three main indexes are still set to record their third consecutive week of losses as investors worry about the risk of recession and US-China trade tensions.
At 12:36 pm ET, the Dow Jones Industrial Average was up 277.57 points, or 1.09%, at 25,856.96, the S&P 500 was up 39.18 points, or 1.38%, at 2,886.78. The Nasdaq Composite was up 124.74 points, or 1.61%, at 7,891.35.
All of the 11 major S&P sectors were higher, with technology stocks providing the biggest boost.
Sectors seen as bond proxies due to their high dividend yields - real estate, utilities and consumer staples - posted smallest gains.
Among stocks, Nvidia Corp jumped 5.9% after posting better-than-expected quarterly profit and revenue, lifting the Philadelphia chip index 2.41%.
However, Applied Materials Inc fell 1.7% after the chip gear maker cautioned that recovery in the memory chip market is unlikely before 2020.
The S&P 500 bank sub-sector rose 2.61% as rate-sensitive lenders benefited from US Treasury bond yields easing off their lows.
General Electric Co jumped 9.1% as Chief Executive Officer Larry Culp bought nearly $2 million worth of company shares, which had recorded their biggest one-day percentage fall in 11 years on Thursday.