Stocks are surging at the open after China reassured investors it doesn't plan to sell any of the European debt it holds.
China's confidence in Europe is overshadowing disappointing reports on U.S. weekly unemployment claims and gross domestic product.
The Labor Department says initial jobless claims fell to 460,000. Economists were expecting a drop to 455,000.
A separate report Thursday says the U.S. economy grew by 3 percent in the first quarter. That's worse than a previous estimate of 3.2 percent.
The Dow Jones industrial average is up 154.85 points, or 1.6 percent, at 10,129.30. The Standard & Poor's 500 index is up 16.32, or 1.5 percent, at 1,084.27, while the Nasdaq composite index is up 52.06, or 2.4 percent, at 2,247.94.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
NEW YORK (AP) — Stock futures fell from their highs, but are still pointing to a big jump at the open of trading Thursday. Disappointing reports on initial jobless claims and gross domestic product ate into the early gains.
Futures are being buoyed by China'a reassurance that it will hold onto European debt.
The Labor Department's weekly report showed initial claims for unemployment benefits fell last week, but not by as much as economists had forecast. A separate report showed the U.S. economy did not grow as fast in the first quarter as previously thought.
Those worse-than-expected reports though were being overshadowed by strength overseas. Asian markets rose overnight and major European indexes are sharply higher.
The gains came after the agency that manages China's $2.5 trillion in foreign reserves denied a Financial Times report that China was considering cutting its exposure to European debt.
Concerns about whether mounting debt problems in Europe will upend a global economic recovery have dragged down stocks around the world in recent weeks. Volatility has also increased as investors remain jittery about how budget cuts in some European countries like Greece, Spain and Portugal could affect growth.
The euro, which is seen as an indicator for confidence in the health of Europe's economy, rose to $1.2235. Trading in major markets around the world has often tracked the euro in recent weeks.
Ahead of the opening bell, Dow Jones industrial average futures rose 147, or 1.5 percent, to 10,065. Standard & Poor's 500 index futures surged 19.80, or 1.9 percent, to 1,081.00, while Nasdaq 100 index futures rose 33.50, or 1.9 percent, to 1,825.00.
The Labor Department said initial claims for unemployment benefits fell to a seasonally adjusted total of 460,000 last week. That's short of the drop to 455,000 that economists polled by Thomson Reuters had forecast.
High unemployment remains a stumbling block to a stronger recovery in the U.S. The unemployment rate jumped to 9.9 percent last month.
A separate report said the nation's economy grew at an annual rate of 3 percent in the first three months of the year, worse than an initial government estimate of 3.2 percent growth. The revised figured was also worse than the updated forecasts by economists that had predicted it first-quarter GDP rose 3.4 percent.
While slow, steady growth is seen as a positive coming out of the recession and helped drive stocks higher early in the year, it still isn't strong enough to make a big dent in unemployment. Growth would have to climb to around 5 percent for a year to cut the unemployment rate by 1 percentage point.
Even if stocks surge out of the gate, early morning gains have not necessarily meant the market will remain strong throughout the day.
Twice this week, stocks have rallied early in the day only to see those advances erased in late-day selloffs. The Dow Jones industrial average was up 135 points Wednesday morning, but ended the day down about 69 points. It was the Dow's eighth drop in the last 10 trading sessions.
The slide Wednesday afternoon was tied to the Financial Times report questioning whether China would cut its holdings of euro-denominated bonds.
Stocks had been rallying for most of the day after two upbeat reports on the U.S. economy. April durable goods orders and new home sales both rose more than forecast, providing evidence that the volatility in markets and concerns about a potential slowdown in Europe's economy have not affected a domestic recovery.
Bond prices fell Thursday as investors moved into riskier assets. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.28 percent from 3.19 percent late Wednesday.
Overseas, Britain's FTSE 100 rose 2 percent, Germany's DAX index gained 2.4 percent, and France's CAC-40 jumped 1.8 percent. Japan's Nikkei stock average rose 1.2 percent.