Stocks jumped on Thursday as solid results from Cisco and mildly encouraging U.S. jobs data gave investors an excuse to scoop up shares beaten down in several days of sharp selling.
Labor Department data showed new U.S. claims for unemployment benefits dropped to a four-month low last week, a dose of good news for an economy battered by a credit-rating downgrade and a spate of soft economic data in recent weeks.
Had we seen a jump (in claims), it would have reinforced recession fears. What we've seen here is not anything
to allay those fears, but just to set them aside temporarily, said Bucky Hellwig, senior vice president of BB&T Wealth Management in Birmingham, Alabama.
Volatility was high during the session and the market remained vulnerable to violent swings in either direction a day after each of the major U.S. stock indexes slid more than 4 percent on fears about the French banking system's health.
While indexes showed solid gains on Thursday, the S&P 500 has fallen for 11 of the past 14 sessions, indicating the selling pressure may not yet be exhausted.
European shares ended higher after French President Nicolas Sarkozy's office said he was to meet with German Chancellor Angela Merkel to discuss euro-zone issues. <.
We're being driven by the news flow out of Europe, and until we get clarity, it's hard to get much traction. At the same time, we're also very oversold, said Art Hogan, managing director of Lazard Capital Markets in Boston.
When we hear of steps being taken to address the situation, the market catches a bit of a bid, but then another news story will come out and we sell off. Volatility is really the word of the week.
The Dow Jones industrial average <.DJI> gained 277.79 points, or 2.59 percent, to 10,997.73. The Standard & Poor's 500 Index <.SPX> rose 32.69 points, or 2.92 percent, to 1,153.45. The Nasdaq Composite Index <.IXIC> climbed 76.83 points, or 3.23 percent, to 2,457.88.
The Nasdaq benefited from strength in Cisco Systems Inc , which jumped 16 percent to $15.92 a day after it report quarterly revenue and profits that topped scaled-back expectations. The S&P information technology sector index <.GSPT> shot up 3.5 percent.
Retailers also provided support after Kohl's Corp climbed 8.6 percent to $48.10 after the moderate-priced department store chain's quarterly earnings beat estimates and it raised its full-year profit view. The Morgan Stanley retail index <.MVR> rose 3.8 percent.
(Reporting by Chuck Mikolajczak: Additional reporting by Leah Schnurr and Ryan Vlastelica; Editing by Jan Paschal)