Stocks climbed in a late-day rally as bond yields slipped, and Wall Street continued to weigh recession risks.
The Dow Jones Industrial Average rose 194.23 points, or 0.64%, to 30,677.36. The S&P 500 gained 0.95% to 3,795.73. The Nasdaq Composite rose 1.62% to 11,232.19.
The tech-heavy Nasdaq outpaced the other averages as market participants continued to mull over the likelihood of an economic downturn, and as the yield on the 10-year Treasury note dipped to its lowest level in roughly two weeks. Bond yields move inversely to prices.
"The market action that we've seen today and yesterday at least on the internals suggests that the market is becoming increasingly concerned with the global economic growth," said Scott Ladner, chief investment officer at Horizon Investments. This is highlighted by the fact that rates are going down on the front end of the U.S. yield curve, he added.
A peek into the broader market index showed more defensive stocks such as consumer staples, utilities, real estate and health-care stocks drove outperformance, with each sector up about 2%. Consumer staples stocks such as Clorox gained 6%.
Homebuilders helped buoy consumer cyclicals, as shares of Lennar and D.R. Horton on Thursday both climbed 4.5% and 5.2%, respectively.
Meanwhile, energy was the worst performing sector in the S&P 500 as oil prices took a hit. Shares of Schlumberger dropped nearly 6.8%. Valero Energy fell 7.6% and Phillips 66 declined about 6.8%.
Airline stocks slumped on transportation issues. Shares of United Airlines dropped about 2.5% as it cut back on flights out of Newark by 12%. Shares of American Airlines dipped 0.9% after dropping service to four small U.S. cities.
Federal Reserve Chair Jerome Powell on Thursday reiterated that the central bank is "strongly committed" to bringing down inflation, as he spoke on monetary policy for a second day before Congress. He also noted that a recession is a "possibility," a fear that has continued to weigh on Wall Street.
"Definitively, we are going into a recession. How severe that recession is yet to be seen," said Nick Giacoumakis, president of NEIRG Wealth Management.
UBS raised its odds of a recession to 69%, becoming the latest investment bank to see a heightened risk of a downturn. Citigroup and Goldman Sachs also increased their recession risk expectations this week.
"We are now watching out for any further negative follow-through or whether we simply hit a local peak and some growth momentum in the hard data resumes," UBS said in a Thursday note.
On the other hand, a top strategist at JPMorgan on Thursday said he believes the U.S. economy will dodge a recession altogether, with the stock market making back any losses in the back half of the year.
The major averages are set for a positive week, with the Dow up 2.6%, the S&P 500 gaining 3.3% and the Nasdaq Composite increasing 4% week to date.
On Thursday, the Labor Department said U.S. weekly jobless claims fell 2,000 to a seasonally adjusted 229,000 for the week ended June 18, showing the labor market remains tight.