Wall Street shares powered higher on Thursday to extend their rally amid growing optimism on prospects for economic recovery as the market shook off the latest grim reminders of the depth of the slump.

The Dow Jones Industrial Average vaulted 174.75 points (2.25 percent) to close at 7924.56, building on a rally that has pushed the blue-chip index up more than 20 percent from March 9 lows.

The Nasdaq composite lifted 58.05 points (3.80 percent) to 1587.00, as the tech-heavy index turned positive for 2009.

The broad-market Standard & Poor's 500 index climbed 18.99 points (2.33 percent) to 832.86, capping a 23 percent rise from lows earlier this month.

Market action came after data showing a revised 6.3 percent pace of decline in the US economy in the fourth quarter, a modest revision from the prior estimate of a 6.2 percent shrinkage.

A separate report showed the number of new jobless claims in the United States rose by 1.2 percent to 652 000 during the week ending March 21 as the country reeled from recession.

Optimism is preserved

But analysts at Charles Schwab & Co. said that following other upbeat data and the various government rescue plans being put into place, "optimism is preserved that the worst of the recession may be behind us."

Larry Kantor at Barclays Capital said in a note to clients that markets are ready to look forward to rosier times.

"We believe that the latest rally will have stronger legs, and thus marks an inflection point," he said.

Kantor said the aggressive efforts by policymakers around the world and a massive decline in inventories sets the stage for better economic times.

"Reflecting all of this, we are now recommending that investors become more aggressive and take risk across a broader range of assets," he said.

Standard & Poor's analyst Tanya Azarchs said the US Treasury's plan announced this week to stabilize the banking system through a public-private effort to buy up toxic assets from the real estate slump may be the element needed to steady the banking system and the overall economy.

Break the US banking logjam

Azarchs said the plan "could break the US banking logjam" and help restore credit flows that will fuel economic recovery.

"If (the plan) unlocks the market and establishes prices for these hard-to-value assets, we believe it could signal the beginning of a recovery for the US banking sector," she said.

The market also was lifted by corporate news. Best Buy rallied 12.58 percent to 37.67 dollars after the discount electronics retailer topped forecasts for earnings and issued upbeat guidance.

Google climbed 2.68 percent to 353.29 dollars after the Internet giant benefitted from an analyst upgrade and announced it will cut almost 200 marketing and sales jobs from its international operations.

Elsewhere in the tech sector, Hewlett-Packard rallied 7.06 percent to 33.20 dollars and Intel advanced 5.89 percent to 15.82 dollars.

In finance, Bank of America fell 1.56 percent to 7.58 dollars after a class action lawsuit accused the banking giant of making untrue statements preceding its purchase of Merrill Lynch last year.

Bonds rebounded from early losses. The yield on the 10-year US Treasury bond fell to 2.733 percent from 2.772 percent on Wednesday and that on the 30-year bond eased to 3.651 percent from 3.717 percent. Bond yields and prices move in opposite directions.

AFP

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