* Materials, industrials gain on Trump's spending plan
* Rate-sensitive sectors underperform
* Indexes up: Dow 2.3 pct, S&P 1.96 pct, Nasdaq 2.1 pct (Updates to late afternoon, )
By Sinéad Carew
Feb 12 (Reuters) - U.S. stocks rose for a second straight session on Monday with broad-based gains across indexes as investors appeared to regain some confidence after Wall Street's biggest weekly drop in two years.
The announcement of President Donald Trump's budget including an infrastructure spending plan helped sectors such as S&P materials and industrials.
But investors' mood was primarily boosted by the S&P's brief breach and bounce back from a key technical level on Friday, according to Adam Sarhan, chief executive of 50 Park Investments, in New York.
"Friday was a near-term low. The market found support with the 200-day moving average. Today you're building on the low," he said. "You have a lot of short-covering and you have a lot of the buy-the-dip crowd show up today. Friday's low can now be used as a very important level of support."
At 3:14 p.m. ET, the Dow Jones Industrial Average rose 556.43 points, or 2.3 percent, to 24,747.33, the S&P 500 gained 51.28 points, or 1.96 percent, to 2,670.83 and the Nasdaq Composite added 144.62 points, or 2.1 percent, to 7,019.11.
All of the S&P 500's major eleven sectors were higher, though interest-rate sensitive sectors real estate, utilities and telecommunications services were the worst performers.
Even the real estate sector managed to eke out a 0.1 percent gain as the afternoon wore on but it was weighed down by U.S. 10-year Treasury yields, which hit a new four-year high of 2.902 earlier in the day.
Stocks were helped a little by Trump's budget proposal for fiscal 2019, which includes $200 billion for infrastructure spending, more than $23 billion for border security and immigration enforcement, as well as $716 billion for military programs, including the U.S. nuclear arsenal.
The S&P materials sector was the biggest gainer with a 2.3-percent rise followed by a 2.2-percent gain in information technology
Wall Street's fear gauge, VIX, short for the CBOE Volatility index was last down 3.9 points at 25.2, well below last week's high of 50.3.
While last week's panic selling was done, strategists were not willing to call an end to the market correction as the S&P was still around 7 percent below its Jan. 26 record.
"It's too soon to tell if it's a counter trend rally that's sustainable," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
The market took fright after strong wage-growth data on Feb. 2 raised the specter of rising inflation and fears of accelerated interest rate hikes, which ignited a rally in bond yields and a selloff in stocks.
Cisco was up 3 percent and American Express gained 3.4 percent after Instinet upgraded the two components of the Dow Industrials to "buy".
Advancing issues outnumbered declining ones on the NYSE by a 3.41-to-1 ratio; on Nasdaq, a 2.69-to-1 ratio favored advancers.
The S&P 500 posted 1 new 52-week high and 8 new lows; the Nasdaq Composite recorded 23 new highs and 35 new lows. (Reporting by Sruthi Shankar in Bengaluru, additional reporting by Sujata Rao in London; Editing by Savio D'Souza and Nick Zieminski)