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Back to Rally Mode: Dow Surges 423 Amid Easing Economic, Eur

The Dow Jones Industrial Average climbed 423 points, or 3.9%, to 11,143, the S&P 500 jumped 51.9 points, or 4.6%, to 1,173 and Nasdaq Composite rose 111.6 points, or 4.7%, to 2,493.

The financial sector, which had been beaten down in prior sessions posted the most gains on Thursday. Bank of America (BAC: 7.25, +0.48, +7.09%) and Goldman Sachs (GS: 118.10, +7.76, +7.03%) were among the top performers. Cisco (CSCO: 15.92, +2.19, +15.95%) posted an increase in its current-quarter revenue forecast, softening uncertainty over the networking-giant's business. Shares jumped more than 15%, providing a boost to the blue chips.

All but 12 S&P 500 components closed in the green as traders took advantage of buying opportunities created by the steep selloff on Wednesday.

"The market has discounted a whole lot of negative news," David Joy, chief market strategist at Ameriprise, told FOX Business. "I think stocks are cheap here."

Weekly jobless claims fell to 395,000 from 402,000 in the prior week, slightly better than expectations of 400,000. The U.S. trade deficit hit $53.1 billion in June, wider than the $48 billion economists forecast. The bigger the trade gap, the more it shaves from broader measures of economic output, meaning a wider deficit could be a hindrance on growth.

The euro zone debt crisis, and European banks, were once again in focus on Thursday morning.

A report on Thursday morning by Reuters, citing sources, that an Asian bank had cut credit lines to major French banks hit traders' confidence. However, Dow Jones reported later in the day, also citing banking sources, that the banks were performing a review, but hadn't yet made any cuts, softening the concerns.

Indeed, major European indices pared steep losses and staged a strong comeback rally. 

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