Stocks close higher, S&P 500, Nasdaq notch six-day winning streak as comeback rally gains steam

Stocks rallied on Thursday as investors regained confidence in the economy following encouraging consumer and labor data that helped ease recession worries.

The Dow Jones Industrial Average leaped 554 points, or 1.39%, to end the day at 40,563.06. The S&P 500 closed up 1.61% at 5,543.22, for its sixth straight gain. The broad market index has advanced roughly 8% from its intraday bottom on Aug. 5. The Nasdaq Composite jumped 2.34% to 17,594.50.

Retail sales increased 1% in July, far surpassing an estimate from Dow Jones that forecast a 0.3% uptick. Also separately, weekly jobless claims fell for the week. The data served as a boon to investors and a broader market trying to mount a comeback from an August rout tied to concerns about a slowing economy that arose following July's disappointing jobs report on Aug. 2.

After a more than 3% gain this week, the S&P 500 is now roughly 2% below its record. The three major U.S. indexes are now trading above their Aug. 2 closing level, which was the session before the global stock market rout on Aug. 5 that was largely driven by investors' concerns about an economic slowdown and an unwinding of a popular hedge fund currency trade.

"Today's solid retail sales and claims data is a reminder that the sky is not falling on the U.S. economy," Wolfe Research chief economist Stephanie Roth wrote on Thursday. "Yes, economic momentum has cooled, but we don't appear to be headed for recession imminently."

Encouraging inflation data this week had largely swept away investors' recessionary fears prior to Thursday's swath of economic data, and led to a rebound in equities following last week's sharp global sell-off.

Dow component Walmart added to the momentum, with a raised outlook and an earnings