Stocks ended the session on a high note, led by energy, tech and financials. The Dow gained more than 250 points while other major averages also finished strongly.
Investors grew reassured that China wasn't about to reignite fears about European debt and bargain-hunters swooped in.
Utilities and consumer staples underperformed, though all 10 S&P sectors rose at least 1 percent. The Nasdaq gained more than 3 percent.
Separate economic reports showed the employment recovery remains lacklusterand first-quarter growth was a bit slower than originally thought. That helped temper sentiment somewhat but wasn't enough to keep away the bargain hunters.
The market fell in whipsaw trading Wednesday, with a late-session drop attributed to ultimately unfounded reports that China was going to put its European assets under review.
With global stormclouds starting to pull back at least for the moment, investors instead focused Thursday on good news.
"The drubbing stocks and commodities have sustained since April 23 was enough for the time being, or at least until there's greater clarity as to what the real cost of the euro zone fiscal and debt makeover will be," John Stoltzfus, chief strategist at Ticonderoga Securities in New York, wrote in his morning note. "For now, we're expecting the rally to gain support until further structural problems surface and force investors once again to ponder threats to global growth."
Retail was among the big gainers for the day as a handful of earnings reports showed a resilient consumer.
Warehouse club Costco reported a jump in quarterly profit that equated to 68 cents a share as sales picked up at the big-box retailer.
More positive earnings news came from high-end jeweler Tiffany, which reported earnings more than doubled over the past year. The company also raised its outlook, sending shares up.
Retail stocks generally were among the market leaders. The SPDRS&P Retail exchange-traded gained more than 3 percent.