NEW YORK (AFP) - US stocks rallied on Tuesday in line with European markets after two straight sessions of steep declines in the wake of Britain's surprise vote to leave the European Union.

The Dow Jones Industrial Average rose 1.6 per cent to 17,409.72.

The broad-based S&P 500 gained 1.8 per cent to 2,036.09, while the tech-rich Nasdaq Composite Index jumped 2.1 per cent to 4,691.87.

Analysts had predicted that stocks would rally at some point after the S&P 500 shed more than 5 per cent in a two-day rout following the shock "Brexit" vote.

Some had viewed the market as oversold in the short-run.

However, analysts cautioned that Tuesday's rally might not have staying power and that US markets could see more volatility ahead if European markets go through another bout of selling.

Especially strong sectors included banks, technology, energy and airlines. All had experienced especially large drops in the last two sessions.