By Caroline Valetkevitch
NEW YORK (Reuters) -The Nasdaq surged more than 3% on Thursday as U.S. stocks rallied after U.S. jobless claims fell more than expected in the latest week, soothing worries the labor market was weakening too quickly.
The S&P 500 was up more than 2%, with technology-related megacaps giving it the biggest boost. The technology sector rose 3.5%, with communication services sector up 2.5% in afternoon trading.
Among the S&P 500’s biggest gainers, shares of Eli Lilly were up 9.5% after the drugmaker raised its annual profit forecast, and sales of its popular weight-loss drug Zepbound crossed $1 billion for the first time in a quarter.
Data showed the number of new applications last week for unemployment benefits fell more than expected.
“Our reading on this is the labor market continues to be OK… The recession fears at this point are probably a little overblown,” said Paul Nolte, senior wealth advisor and market strategist for Murphy & Sylvest in Elmhurst, Illinois.
Last week’s disappointing jobs report for the month of July sparked fears of a potential U.S. recession and stocks sold off as market volatility rose.
The Dow Jones Industrial Average rose 721.77 points, or 1.86%, to 39,485.22, the S&P 500 gained 124.91 points, or 2.40%, to 5,324.41 and the Nasdaq Composite added 485.10 points, or 3%, to 16,680.91.
The second-quarter earnings season is winding down, but investors are watching final results closely after some disappointments earlier in the reporting period.
Under Armour surged 19% after the sports apparel maker posted a surprise first-quarter profit, benefiting from its efforts to cut inventory and promotions.
Advancing issues outnumbered declining ones on the NYSE by a 3.27-to-1 ratio; on Nasdaq, a 2.71-to-1 ratio favored advancers.
The S&P 500 posted 6 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 28 new highs and 162 new lows.
(Additional reporting by Shubham Batra and Shashwat Chauhan in Bengaluru; Editing by Varun H K, Shinjini Ganguli and Saumyadeb Chakrabarty)