Wall Street closed sharply higher on Thursday, with interest rates still dominating the proceedings. Higher-than-expected weekly jobless claims data raised hope that the Fed would cut rates sooner rather than later. All of the three major stock indexes ended in the green.

How Did the Benchmarks Perform?

The Dow Jones Industrial Average (DJI) rose 331.37 points, or 0.9%, to close at 39,387.76. Twenty-five components of the 30-stock index ended in positive territory, while five ended in negative. This was the seventh straight daily progression for the benchmark.

The tech-heavy Nasdaq Composite gained 43.51 points, or 0.3%, to close at 16,346.27.

The S&P 500 advanced 26.41 points, or 0.5%, to close at 5,214.08. Ten of the 11 broad sectors of the benchmark index closed in the green. The Real Estate Select Sector SPDR (XLRE), the Utilities Select Sector SPDR (XLU) and the Energy Select Sector SPDR (XLE) gained 2.4%, 1.5% and 1.3%, respectively, while the Technology Select Sector SPDR (XLK) lost less than 0.1%.

The fear-gauge CBOE Volatility Index (VIX) decreased 2.4% to 12.69.

Jobless Claims Tick in Higher Than Expected

The Labor Department said on Thursday that initial jobless claims rose to 231,000, increasing 22,000 for the week ending May 4. The previous week's level was revised up by 1,000 from 208,000 to 209,000. The four-week moving average was 215,000, marking a rise of 4,750 from the previous week. The prior week's average was revised up by 250 to 210,250.

Continuing claims came in at 1,785,000 for the week ending Apr 27, increasing 17,000 from the previous week’s revised level. The previous week's level was revised down by 6,000 from 1,774,000 to 1,768,000. The four-week moving average was 1,781,000, a decrease of 6,250 from the previous week's revised average. Last week's average was revised down by 1,500 from 1,788,750 to 1,787,250.

Following this jobs report, a wave of optimism took a grip on the market yet again, with investors inferring that the U.S. economy could stay strong enough to avoid a recession, and the Fed would be compelled to cut interest rates sooner than expected.

Earlier, market participants were betting on just one rate cut before the year ended. However, the softer-than-expected jobs report from last week, coupled with this, has led to a fundamental shift in their expectations. They are currently expecting two cuts to rates this year.

While the stock rally in the session benefited all sectors, tech, which has been on an overdrive, did not shift any gears and remained virtually unchanged. Real estate emerged as the biggest winning sector in the session. Consequently, shares of CBRE Group, Inc. CBRE and American Tower Corporation AMT rose 1.1% and 2.8%, respectively. Both currently carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Treasury Yields Fall on Market Optimism

Yields on U.S. government treasury notes finished lower on Thursday, guided by optimism over the stock market. The yield on the 10-year note was at 4.46% on Thursday, down from 4.7% two weeks ago. The rate fell 0.8% from the previous session.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

American Tower Corporation (AMT) : Free Stock Analysis Report

CBRE Group, Inc. (CBRE) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research