Stocks surged across the board to finish at multi-year highs Thursday, propelled by a batch of upbeat economic reports and after ECB President Mario Draghi said the central bank agreed on a new bond-buying program.
The Dow Jones Industrial Average surged 244.52 points, or 1.87 percent, to close at 13,292.00, logging its best close since December 2007. Cisco and BofA led the blue-chip gainers.
The S&P 500 soared 28.68 points, or 2.04 percent, to end at 1,432.12, posting its highest finish since January 2008. The Nasdaq jumped 66.54 points, or 2.17 percent, to finish at 3,135.81, logging its best close in 12 years.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, tumbled 10 percent to end below 16. (Read More: Stocks at Four-Year Highs, But What's Next?)
All key S&P sectors ended firmly in positive territory, led by financials and materials.
“There’s no ambiguity about the rally today—every economic data point we got was positive and the market liked Draghi’s comments,” said Brian Gendreau, market strategist at Cetera Financial Group. “We don’t know if this new program is going to succeed, but the ECB seems to be squarely in the camp of taking positive action.”
ECB President Mario Draghi said the new bond-buying program, aimed at the secondary market, would "safeguard the monetary policy transmission in all countries in the euro zone area." (Read More: Nearly Half of Germans Don't Trust Draghi)
"People have been fatigued and cynical about Europe so that leaves a lot of room for upside," said Gendreau.
Still, the ECB said it expects a very gradual economic recovery in the euro zone and slashed its GDP forecasts for the year. The euro initially erased gains against the dollar but soonrebounded, while European shares rallied. Earlier, the ECB kept interest rates unchanged at 0.75 percent.
“The market’s telling you that it’s dying for this [European] crisis to be over, but the fact is, [Draghi’s] news is not new,” said Kenny Polcari, managing director of ICAP Equities. “I want to be bullish about [the rally], I want the market to go higher, but the fact is that once again, the pendulum always swings too far to the left or to the right and it’s going to come back a bit.”
On the economic front, the pace of growth in the services sector rose in August, according to the Institute for Supply Management's non-manufacturing report.
Private businesses added 201,000 jobs in August, according to a closely watched report from ADP and Macroeconomic Advisors, easily topping expectations for a gain of 145,000. And Jobless claims last week declined to its lowest level in a month, according to the Labor Department.
Also, planned job cuts in August hit a 20-month low, according to a report from consultants Challenger, Gray & Christmas.
The flurry of jobs data come ahead of Friday's widely-watched monthly government report for August, which is projected to show nonfarm payrolls rose by a modest 125,000, while the unemployment rate is expected to hold steady at 8.3 percent.
Amazon.com rallied to all-time highs after the online retailer unveiled a new Kindle Fire tablet as it seeks to take on Apple's iPad. Amazon also refreshed its line of stand-alone e-readers.
Apple edged higher after SocGen raised its price target on the iPad maker to $800 from $750.
Sears soared after the retailer's Chairman Eddie Lapert disclosed he bought 2.4 million shares of the company at $52.75.
—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
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