After a rocky start to the week, U.S. stocks roared back on Thursday, giving major stock indexes their biggest gain of the year.
The Dow Jones industrial average and the S&P 500 index each closed up 1.2 percent, their largest single-day increase since Dec. 18.
The rally helped the market rebound a day after a modest loss and continued a gradual comeback since a plunge of more than 2 percent on Monday.
“The market was very oversold going into the day’s trading,” said Jim Russell, senior equity strategist at U.S. Bank Wealth Management.
The Dow Jones industrial average jumped 188.30 points, or 1.2 percent, to close at 15,628.53. The Standard & Poor’s 500 index rose 21.79 points, also 1.2 percent, to 1,773.43. Both indexes were still down about half a percent for the week following a steep drop on Monday.
The Nasdaq composite gained 45 points, or 1.1 percent, to 4,057.12.
Thursday’s surge began overseas, where the European Central Bank decided not to cut interest rates. The move propelled major European stock indexes sharply higher.
Then the markets got a dose of good news on the U.S. job market. The Labor Department reported that fewer people applied for unemployment benefits last week.
That report, combined with a private survey on U.S. hiring released Wednesday, appeared to bolster investors’ confidence that the government will issue a positive January jobs report today.
“Those two numbers combined … suggest that perhaps tomorrow’s numbers might look a little stronger,” Russell said.
All week, investors have been looking ahead to the employment survey and what it will augur for the economy.
Evidence of healthy U.S. job growth would suggest that the world’s biggest economy is still expanding at a solid pace. That would comfort investors, many of whom became uneasy in recent weeks after signs of weaker global growth emerged.
Those concerns were seen by some other investors as a buying opportunity.
“The fear in the markets has subsided some,” said Marc Doss, regional chief investment officer at Wells Fargo Private Bank.
Thursday’s gains were broad. All 10 of the S&P 500’s sectors rose.
Stock buyers got going early on, reacting to better-than-expected earnings late Wednesday from the Walt Disney Co. The media giant got a lift from its movie hit “Frozen” and sales of the “Disney Infinity” video game. The stock rose $3.80, or 5.3 percent, to $75.56.
All told, major indexes gained a little bit of the ground lost since Monday, when the Dow sank 326 points as disappointing news about U.S. manufacturing unnerved investors.