US stocks rally after Yellen's speech

US stocks rose as Wall Street continued to digest a key speech from US Federal Reserve Chair Janet Yellen and the newly-released spending data.

The Dow Jones Industrial Average on Monday increased 121.97 points, or 0.66 per cent, to 18,517.37, Xinhua news agency reported.

The S&P 500 added 12.87 points, or 0.59 per cent, to 2,181.91. The Nasdaq Composite Index was up 21.46 points, or 0.41 per cent, to 5,240.37.

"In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months," Yellen addressed central bankers at a conference in Jackson Hole, Wyoming, on Friday.

Pointing to solid growth in household spending and a strengthening job market, Yellen said the US economy is "now nearing" the Fed's statutory goals of maximum employment and price stability.

Analysts said it's possible for the Fed to hike interest rates as soon as September. But about 71 per cent of 62 economists surveyed by the Wall Street Journal this month believed the Fed will wait until December to raise rates.