The Labor Department said first-time benefit claims fell by 20,000 last week to 331,000. In a separate report, the department said unit labor costs dropped 1.6 percent in the fourth quarter as gains in productivity outpaced gains in compensation.
The Dow Jones industrial average added 188.30 points or 1.22 percent to 15,628.53. The Standard & Poor's 500 added 21.79 points, 1.24 percent, to close at 1,773.43. The Nasdaq composite index gained 45.57 points, 1.14 percent, to close at 4,057.12.
On the New York Stock Exchange, 2,345 stocks advanced and 776 declined on a volume of 3.7 billion shares traded.
In Japan, the Nikkei 225 index lost 25.26 points or 0.18 percent to closed at 14,155.12.
London's FTSE 100 gained 100.39 points, 1.55 percent, closing at 6,558.28.
The 10-year U.S. treasury was yielding 2.703 percent, off 8/32.
The euro traded at $1.359 against the dollar. Against the yen, the dollar was trading at 102.06 yen.
Gold shed 20 cents, settling at $1,257 an ounce on the Comex division of the New York Mercantile Exchange. Silver shed 0.8 cents to settle at $19.925 an ounce.
Crude oil added.4 cents to reach at $97.88 per barrel on the NYMEX.