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S&P 500 jumps the most since March, powered by better-than-expected earnings

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U.S. stocks rallied Thursday after better-than-expected earnings reports from Walgreens Boots Alliance, UnitedHealth, Bank of America and other major companies.

The S&P 500 rose 1.7% to 4,438.26 in its biggest jump since March. The Dow Jones Industrial Average jumped 534.75 points, or 1.6%, to 34,912.56. The Nasdaq Composite added 1.7% at 14,823.43.

The three averages are now on track to close the week higher, with the S&P 500 and the Dow roughly 2% off their record highs and the Nasdaq Composite about 4% behind.

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Third-quarter earnings season ramped up Thursday with several big banks and Dow members reporting financial results before the bell.

Eight members of the S&P 500 reported earnings this morning and all eight beat earnings-per-share expectations from Wall Street.

"So far, the overwhelming majority of large US companies have been able to generate higher profitability despite rising labor costs because sales growth has been so robust. We expect the same to be true in 3Q," Mark Haefele, chief investment officer of UBS Global Wealth Management, said in a note Thursday.

Walgreens Boots Alliance was the top performer in the Dow and S&P 500, rallying 7.4% after the drugstore chain beat earnings expectations. The company announced it would become majority owner of primary-care company VillageMD with a $5.2 billion investment and make health care its growth engine.

Dow constituent UnitedHealth also popped 4.2% after the company's quarterly results topped estimates.

Bank of America, Morgan Stanley and Citigroup saw their shares rise 4.5%, 2.5% and 0.8% respectively, after beating earnings expectations. Wells Fargo shares declined 1.6% despite an earnings beat.

Meanwhile, falling rates boosted technology stocks. The benchmark U.S. 10-year Treasury yield dipped, typically benefiting high-growth names as lower rates lift the value of companies' future earnings.

Big Tech stocks Microsoft, Apple and Google-parent Alphabet each gained at least 2%, providing the market with support.

Caterpillar was among the Dow's biggest gainers after Cowen initiated coverage of the equipment maker with an outperform rating. UPS rose after an upgrade from Stifel, which cited upcoming holiday demand.

A lower-than-anticipated number of weekly jobless claims added to the positive market sentiment. Initial unemployment insurance claims last week totaled 293,000 – the first time the tally fell below the 300,000 level during the pandemic-era.

"We're seeing fresh and welcome signs of improvement in the job market," said Bankrate's Mark Hamrick.

September's producer price index came in lighter than expected, also helping sentiment. Wholesale prices rose 0.5% from the month prior versus the 0.6% Dow Jones estimate.

—CNBC's Michael Bloom contributed to this report.