Stocks rallied on Friday after a speech by Federal Reserve Chairman Ben Bernanke raised hope the Fed could consider further stimulus measures for the economy at an extended policy meeting in September.

Initially stocks fell after Bernanke stopped short of detailing plans to strengthen the ailing economy. But the market turned higher as investors surmised the Fed was leaving the door open for action.

He didn't give the market the green light for QE3. He also didn't give the market the red light for QE3, said Kevin Caron, market strategist at Stifel, Nicolaus in Florham Park, New Jersey, referring to a possible third round of quantitative easing.

By implying that inflation is viewed as not a concern, it leaves the possibility for something down the road, he said.

The Dow Jones industrial average <.DJI> was up 141.38 points, or 1.27 percent, at 11,291.20. The Standard & Poor's 500 Index <.SPX> was up 16.72 points, or 1.44 percent, at 1,175.99. The Nasdaq Composite Index <.IXIC> was up 53.05 points, or 2.19 percent, at 2,472.68.

Bernanke, speaking in Jackson Hole, Wyoming, said the central bank's policy panel would meet for two days in September instead of the scheduled one day to discuss any more stimulus.

While expressing long-term optimism, Bernanke said the Fed found recent developments troubling and saw a low inflation rate.

The Jackson Hole vigil now becomes the September FOMC vigil, Caron said.

Shares of property insurers rose after falling on worries about damage from Hurricane Irene. Travelers Cos Inc rose 0.5 percent to $48.23, while Allstate Corp shares gained 0.5 percent to $24.57, and Chubb Corp climbed 1.3 percent to $59.40.

As Irene bore down on North Carolina, tens of thousands of people evacuated and East Coast cities, including New York, braced for a weekend hit from the powerful storm.

NYSE Euronext said the New York Stock Exchange plans to open for trading as usual next week, but because of the possibility of flooding, a decision will not be made until Saturday or Sunday.

Technology stocks led the advance, with Cisco Systems Inc , Microsoft Corp and Intel Corp among the top gainers on the Dow.

Cisco shares were up 2 percent at $15.38, while Microsoft shares rose 2.7 percent to $25.24 and Intel Corp put on 2.1 percent to $19.82.

The S&P information technology index <.GSPT> was up 0.9 percent, the best-performing sector on the S&P.

It's a pretty broad market rally right now, but tech has been really hammered in the selloff, so you see that leading the rally, said Gary Wedbush, head of trading at regional investment bank Wedbush Morgan in Los Angeles.

Tiffany and Co rose 6.9 percent to $67.43 after it raised its full-year profit outlook.

About five stocks rose for every declining stock on the New York Stock Exchange, while about four stocks rose for every declining stock on the Nasdaq.

(Reporting by Ashley Lau; Editing by Kenneth Barry)