Ending a four-day slide for the blue chips, the Dow climbed nearly 200 points on Thursday as a wave of buying in the retail sector helped Wall Street forget about a disappointing labor report.

Today's Markets

The Dow Jones Industrial Average jumped 172.54 points, or 2.08%, to 8472.40, the Standard & Poor's 500 added 19.32 points, or 2.14%, to 920.26 and the Nasdaq Composite picked up 37.20 points, or 2.08%, to 1829.54. The consumer-friendly FOX 50 rose 13.01 points, or 1.96%, to 677.55.

Thursday’s triple-digit rally, the Dow’s strongest since June 1, was sparked by Bed, Bath & Beyond’s (BBBY) solid quarterly results, a string of successful bond auctions and recovering crude oil prices. The gains came in the face of new data that showed jobless claims unexpectedly climbed to five-week highs.

“This market is getting sort of increasingly desensitized to the employment metrics. They are viewing them as what they are -- a lagging indicator,” said Craig Peckham, equity trading strategist at Jefferies & Co.

Despite the solid performance, the markets remain on track for a rare two-week losing streak. Still, the gains put at least a temporary stop to a recent wave of selling that had slammed Wall Street, erasing almost 300 points from the Dow's three-month surge. The bears had successfully argued in recent days that stocks had gotten ahead of the still-weak U.S. economy, a point highlighted by the new labor data.

At the same time, the triple-digit rally Thursday underscores the amount of cash waiting on the sidelines to be deployed by bargain-hunting portfolio managers during pullbacks. 

“As investors get any whiff that the path of least resistance is higher, these moves start to become self-fulfilling. People are getting pulled into the market to chase returns,” said Peckham.

Almost every Dow stock closed at least 1% higher on Thursday, led by American Express (AXP), Alcoa (AA) and Merck (MRK). Bank of America (BAC) was the lone-blue chip stock that was left out of the rally, ending exactly unchanged.

The Nasdaq Composite advanced more than 1% for the second-straight session as tech stocks like Dell (DELL) and Amazon.com (AMZN) stayed hot. 

Thursday's advance was led by consumer discretionary stocks as retailers like J.C. Penney (JCP) and Target (TGT) rallied around better-than-expected results from Bed, Bath & Beyond. Reporting after Wednesday's close, Bed, Bath & Beyond surprised the Street with a 14% jump in net income amid a 1.6% rise in same-store sales. 

Data, Bond Markets in Focus

The gains for consumer discretionary stocks are notable in that they come despite a new report from the Labor Department that showed initial jobless claims unexpectedly jumped by 15,000 last week to 627,000 -- the highest level since May 16. Economists had expected a decline of 3,000. Also, the government said claims filed by those out of work for more than one week climbed by 29,000 to 6.74 million. 

The markets have been looking for more evidence the labor markets have stabilized as layoffs affect consumer spending, which accounts for two-thirds of the U.S. GDP. 

Wall Street also breathed a sigh of relief as the Treasury’s $27 billion auction of seven-year notes went off without a hitch Thursday afternoon, capping off a week that saw heavy demand despite a record $104 billion of note sales. The successful efforts should ease fears in the short-term about higher interest rates hampering an economic recovery.

“At the completion of a record week of debt issuance, one thing is quite clear; the Treasury is having relatively few, if any, issues selling its debt,” Dan Greenhaus, equity analyst at Miller Tabak, wrote in a note.

Health-care stocks were also on the rise, jumping more than 3% as a sector, with individual names like Cigna (CI) and Aetna (AET) leading the way up.

Meanwhile, Ben Bernanke remained in the spotlight as the Federal Reserve chairman told lawmakers he did not bully BofA into buying Merrill Lynch. He also said he never threatened to oust the bank's management if they walked away from the deal. 

Energy stocks received a jolt from crude oil, which rebounded from Wednesday's slide by climbing $1.56 per barrel, or 2.27%, to $70.23.

Data Dump

The Commerce Department revised its first-quarter GDP estimate to reflect a decline of 5.5%, up from its earlier estimate of -5.7%. However, this data didn't affect the markets much as it is a very backward-looking report that Wall Street has already mostly priced in.

Corporate Movers

General Motors received a final green light from U.S. bankruptcy court for $33 billion in debtor-in-possessor financing from the governments of the U.S. and Canada.  

Lennar (LEN) surged 17% after the home builder posted a second-quarter loss of 76 cents per share on $891.9 million in revenue. The loss matched the home builder's performance from a year ago, though homebuilding sales were 23% lower to $788.6 million and deliveries fell 18% to 3,149 units.

Hertz (HTZ) lifted its second-quarter profit outlook above estimates despite the bankruptcies of General Motors and Chrysler. The car rental company also sees an unexpected 2009 profit of 12 cents to 15 cents per share, well above estimates for a 21-cent loss.

Bank of America (BAC) said it has successfully plugged the $33.9 billion shortfall identified by the government, with the latest fundraising efforts coming from a swap of $3.9 billion of preferred shares for 200 million shares of common equity.

Tween Brands (TWB) surged nearly 30% after Dress Barn (DRBN) unveiled a $157 million all-stock deal to buy the teen apparel seller. The offer values Tween at a 20% premium to its close on Wednesday. 

ConAgra Foods (CAG) rose sharply after the maker of Slim Jim’s matched estimates with an adjusted-profit of 41 cents per share on a 7.5% jump in sales. The food maker also issued a full-year forecast that would meet or beat the Street.

Imax (IMAX) climbed 7% amid reports that all 160 of its midnight shows Tuesday of “Transformers: Revenge of the Fallen” were sold out, Dow Jones Newswires reported.  

American International Group (AIG) unveiled plans to return $25 billion in government aid by giving the U.S. stakes in a pair of life insurance units it intends to spin off. 

Nike (NKE) reported a better-than-expected 30% drop in quarterly profit but warned of weak orders ahead. The shoemaker reported a quarterly profit of 99 cents per share, beating the Street by 3 cents. 

Lear (LEA), which is one of the largest auto suppliers for General Motors, appears headed for a Chapter 11 bankruptcy filing over the next several days amid a heavy debt load, the New York Post reported, citing debtholders. The stock lost almost 40% of its value on the news.

Cigna (CI) tapped David Cordani, the health insurer’s chief operating officer, to take over for retiring CEO H. Edward Hanway in January. Independent director Isaiah Harris will take over as nonexecutive chairman.

Global Markets 

European stocks closed modestly lower across the board. London's FTSE 100 tumbled 0.64% to 4252.57, France's CAC 40 sank 0.68% to 3163.10 and Germany's DAX dropped 0.73% to 4800.56.

Asian markets ended sharply higher, led by Japan's Nikkei, which soared 2.15% to 9796.08. Hong Kong's Hang Seng rallied 2.14% to 18275.03.