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Dow futures briefly add more than 200 points after GDP beat

U.S. stock index futures pointed to a sharply higher open Thursday, with the Dow briefly indicating gains of more than 200 points following a solid GDP report and after the stellar close seen on Wednesday.

Dow futures dipped to trade about 120 to 150 points higher before the second estimate of second-quarter GDP came in at 3.7 percent, topping the first read of an annualized 2.3 percent.

Weekly jobless claims came in slightly lower than expected at 271,000, marking the first decline in five weeks and indicating continued improvement in the labor market.

Bond yields rose, with the 10-year at 2.2 percent and the 2-year at 0.7 percent. The U.S. dollar traded higher against major world currencies, with the euro weaker near $1.12 and the yen also weaker near 120.5 yen against the greenback.

"The combination of stronger economic data from both the U.S. and Europe and more stable China and EM, combined with a somewhat more dovish Fed postponing rate hikes is definitely good news for both the U.S. and Europe," said Ilya Feygin, senior strategist at WallachBeth Capital.

"The U.S. market has already partially reacted yesterday and will open about 0.8 percent higher this morning," he said. It faces overhead resistance less than 1 percent above here and buying on the elevated opening gap has not been a good tactical buy point in this more volatile market with lower liquidity."

Investors will also eye a key meeting of central bankers at Jackson Hole, Wyoming. The annual Economic Policy Symposium starts on Thursday and brings together academics, financial market participants and many of the world's leading central bankers.

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Traders work on the floor of the New York Stock Exchange.
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Traders work on the floor of the New York Stock Exchange.

The event will be scrutinized for signals on near-term monetary policy action in the U.S., although many monetary policymakers are seen opting out, including U.S. Federal Chair Janet Yellen and Daniel Tarullo, a member of the Fed's Board of Governors.

Federal Reserve Bank of Kansas City President Esther George said in a CNBC interview from Jackson Hole that the central bank should normalize interest rates, a view the non-voting Fed member has consistently held. She added it's important for the Fed to understand the extreme volatility in stock markets this week, but cautioned that markets are focused on the near term.

On Thursday, New York Fed President William Dudley said the case for a U.S. interest rate hike in September has become less compelling. The remarks added support to gains in equities. However, he did not say September was off the table, instead adding that the Fed would review data and market conditions.

The latest report on pending home sales is due at 10:00 a.m. ET.

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After five days of gut-wrenching, triple-digit declines, the Dow surged 619 points into Wednesday's close, finishing the day at 16,285. The S&P 500 was up nearly 73 at 1,940.5.

The S&P 500 rose out of correction territory, while the Nasdaq Composite closed right on the edge of breaking out and the Dow Jones industrial average remained in correction mode.

Stock markets in Asia and Europe saw strong gains Thursday, with China's Shanghai Composite index closing up 5.4 percent to reclaim the critical 3,000 mark, tracking the upbeat sentiment across the region underpinned by Wall Street's biggest one-day gain since 2011 overnight.

The positive close in China marked the first higher finish in five trading sessions after sentiment in the U.S. managed to outweigh the fears surrounding China's slowing economy, which has been partly responsible for the recent sell off seen in global stocks.

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Some major earnings were also due for release Thursday, including Dollar General, Tiffany and Signet Jewelers are before market open. Autodesk, GameStop, Smith & Wesson and Splunk are due after the bell.

Tiffany earned an adjusted 86 cents per share for its latest quarter, missing estimates by 5 cents. Revenue was also below forecasts, with the luxury goods retailer pointing to the negative effects of a strong dollar and challenging economic conditions in certain markets.

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Dollar General beat estimates by 1 cent with quarterly profit of 95 cents per share, though revenue was slightly below forecasts. The discount retailer said both customer traffic and average purchases grew during the quarter.

CNBC's Peter Schacknow contributed to this report.