The Dow Jones Industrial Average jumped 322.55 points, or 0.98 percent, to 33,291.78. The S&P 500 was up 58.35 points, or 1.41 percent, to 4,199.12. The Nasdaq Composite Index increased 207.74 points, or 1.67 percent, to 12,639.27.
All the 11 primary S&P 500 sectors ended in green, with materials and communication services up 2.26 percent and 2.06 percent, respectively, leading the gains.
Powell is set to speak on Friday at the central bank's Jackson Hole symposium. Traders will pay close attention to it to look for clues on the Fed's future interest rate path.
"We think the outlook is still too uncertain for the Fed to pivot policy, as the recent encouraging trends in the data may not be sustained over the medium term," Mark Haefele, chief investment officer at UBS Global Wealth Management, said in an analysis on Thursday.
The Fed raised rates by 75 basis points at its June and July meetings in an effort to stifle rampant inflation.
On the economic front, U.S. initial jobless claims, a rough way to measure layoffs, fell by 2,000 to 243,000 in the week ending Aug. 20, the Department of Labor reported Thursday. Economists polled by The Wall Street Journal had forecast new claims to total 255,000.
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