The Dow Jones Industrial Average jumped 332.04 points, or 1.03 percent, to 32,529.63. The S&P 500 rose 48.82 points, or 1.21 percent, to 4,072.43. The Nasdaq Composite Index increased 130.17 points, or 1.08 percent, to 12,162.59.
Ten of the 11 primary S&P 500 sectors ended in green, with real estate and utilities up 3.7 percent and 3.53 percent, respectively, outpacing the rest. Communication services slipped 0.73 percent, the lone declining group.
The above market reactions came despite data showing the U.S. economy contracted in the second quarter.
The U.S. GDP shrank at an annual rate of 0.9 percent in the period after a 1.6-percent contraction in the first quarter, the Commerce Department reported on Thursday. Economists polled by The Wall Street Journal had forecast a 0.3 percent increase.
Investors also assessed the Federal Reserve's rate hike path.
The Fed on Wednesday raised its benchmark interest rate by 75 basis points, the second in a row of that magnitude, in an effort to tame inflation that's running at a four-decade high.
Fed Chairman Jerome Powell warned that another "unusually large" rate increase may be warranted at the next meeting in September, but noted that this would depend on upcoming economic data.
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