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Stocks opened sharply higher on Thursday, with the S&P 500 topping the 1,700-point mark, as Wall Street cheered upbeat economic data from China and Europe and a better-than-expected jobless claims report.
The Dow Jones Industrial Average was 118 points higher in early morning trading.
The S&P 500?rose 15 points to move through the 1700 barrier and the Nasdaq also rallied at the open. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 13.
Major averages closed out their best July since 2010 on Wednesday. For the year, the Dow and S&P 500 have spiked more than 18 percent for the year, while the Nasdaq has surged nearly 20 percent.
On the economic front, weekly jobless claims tumbled 19,000 to a seasonally adjusted 326,000, dropping to a 5-1/2 year low, according to the Labor Department. Economists surveyed by Reuters expected a reading of 345,000, compared with 343,000 in the prior week.
Also, the number of planned layoffs at U.S. firms declined modestly in July, with employers announcing 37,701 cuts last month, down 4.2 percent from 39,372 in June, according to the report from consultants Challenger, Gray & Christmas.
Meanwhile, the pace of growth in the U.S. manufacturing sector accelerated in July to the highest level in two years as new orders surged, according to a report by the Institute for Supply Management. The data supported the view the economy will pick up in the second half of the year.
The ISM said its index of national factory activity rose to 55.4 from 50.9 in June, topping expectations for 52. It was the highest since June 2011. New orders also racked up their best level in more than two years, jumping to 58.3 from 51.9.
The reports came ahead of Friday's widely-watched government jobs report. Analysts polled by Reuters expect to see a gain of 184,000 in July, after a 195,000 uptick in the previous month.
(Read more:July jobs report key to Fed action)
Stocks ended flat on Wednesday after the Federal Reserve did not signal when it would start tapering its bond-buying program. However, it did raise concerns about rising mortgage rates and flagged the risks of inflation falling too far below its target. In addition, the central bank slightly downgraded its outlook for economic growth.
(Read more:Best S&P valuestocks to get through August)
Asian stocks rallied on Thursday after China's official PMI (purchasing manager's index) data showed the country's manufacturing sector continued to expand in July, defying forecasts of a contraction. But the picture was mixed, with a private gauge of factory activity by HSBC showing an 11-month low of 47.7 in July. Japan's Nikkei rallied to a one-month peak on the news, the Shanghai Composite hit a one-week high and South Korea's Kospi touched a seven-week high.
"Official PMI is more skewed to larger companies, and the HSBC figure reflects the smaller companies and that is where you get this divergence," said Frederic Neumann, co-head of Asian economics research at HSBC.
(Read more: Will China PMI mark the end of negative data surprises?)
In Europe, the European Central Bank kept its main interest rate unchanged at a record low of 0.5 percent, and reiterated that rates would remain at present or lower levels for an extended period of time.
"Labor market conditions remain weak. Looking ahead to the remainder of the year and 2014, euro area growth should benefit from a gradual recovery in global demand," said ECB president Mario Draghi in a press conference following the announcement. "Our monetary policy stance remains accommodative for as long as necessary. We have unanimously confirmed the forward guidance we gave last time."
Euro zone manufacturing activity grew for the first time in two years in July, with the purchasing manager's index (PMI) climbing to 50.3 in July. A reading above 50 indicates an expansion.
And the Bank of England left its interest rates unchanged at 0.5 percent, as expected, under its new governor, Mark Carney.
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