Stocks logged a gain for the second session Thursday as investors were optimistic Greece will likely clear a key hurdle with private creditors to avoid a disorderly default and ahead of a key government jobs report on Friday.
The Dow Jones Industrial Average rose 70.61 points, or 0.55 percent, to close at 12,907.94, led by Alcoa and Caterpillar .
The S&P 500 jumped 13.28 points, or 0.98 percent, to end at 1,365.91. The Nasdaq rallied 34.73 points, or 1.18%, to end at 2,970.42, Both the S&P and Nasdaq rebounded from their big losses from Tuesday's steep decline.
Despite the gains, all three major averages are still poised to log a decline for the week.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, ended below 18.
All 10 S&P sectors ended firmly in positive territory, led by materials and industrials.
European shares finished higheramid optimism that Greece would secure its bond swap deal with private investors. Nearly 95 percent of bondholdershave signed up to participate in the bond swap deal, according to officials, exceeding the 90 percent rate the country had been aiming for.
"[Deputy Prime Minister Evangelos] Venizelos informed the cabinet that the PSI (debt swap) is going well, there are no surprises," said a finance minister. Official results aren't expected to be released until Friday.
- Global Markets Counting on Successful Greek Bond Swap
Meanwhile, the ECB held interest rates at 1.0 percentfor the third-straight month, as expected.
“There’s always a wall of worry that the stock market has to climb,” said Brian Gendreau, market strategist at Cetera Financial Group, citing ongoing worries in Europe, government spending, elections and rising gasoline prices.
“But offsetting that is a sense that there is still a lot of momentum in the economy,” he said.
Weekly claims for unemployment benefits unexpectedly gained 8,000 last weekto a seasonally adjusted 362,000, according to the Labor Department. Economists polled by Reuters had forecast claims unchanged at 351,000 last week. Despite the increase, claims are still near their lowest in four years.
Meanwhile, the number of job cuts fell 3.3 percent in February, according to Challenger, Gray & Christmas. Employers last month said they planned to cut 51,728 jobs, down from 53,486 job cuts announced in January.
The reports come ahead of Friday's monthly government jobs report. Economists polled by Reuters expect a gain of 210,000 in overall nonfarm payrolls and an addition of 225,000 jobs in the private sector.
“The risk is to the upside on that [jobs number],” said Gendreau. “But it will be hard to predict the market’s reaction.”
Apple edged higher a day after the tech giant unveiled a new iPadwith a "retina" high-resolution display, the company's first tablet to operate on the high-speed 4G network. In addition, at least two brokerages raised their price targets on the firm.
McDonald's slumped after the fast-food giant posted a smaller-than-expected gainin February same-store sales, hurt by weakness in Europe, Asia/Pacific, the Middle East and Africa.
Fellow Dow component ExxonMobil also declined after the oil giant said its 2012 oil and natural gas output would drop 3 percent from last year.
Meanwhile, Verizon said it will close several customer service centers, likely affecting as many as 3,175 employees, according to sources.
AIG fell after the Treasury Department said it will sell $6 billion worth of the insurer's stock and struck another deal for the insurer to pay down $8.5 billion more in obligations.
Smithfield Foods nudged lower even after the hog and pork producer posted earnings that topped estimates, helped by strong demand in Asia.
H&R Block rebounded a day after the tax preparer
Coach rallied to lead the S&P 500 gainers after the handbag designer's CEO Lew Frankfort said the company's business is "trending extremely well," speaking at a Bank of America Merrill Lynch conference. He also added that the firm continues to see growth opportunities in emerging markets, especially China.
American Eagle gained after at least two brokerages raised their price targets, while another two boosted their ratings on the retailer.
—Follow JeeYeon Park on Twitter: @JeeYeonParkCNBC—
On Tap This Week:
FRIDAY: Non-farm payrolls, international trade, wholesale trade; Earnings from Ann
More From CNBC.com:
