NEW YORK (

TheStreet

) -- Stocks roared higher Thursday as expectations for strong job growth in February swelled and oil prices pulled back on reports of possible peace talks in Libya.

The

Dow Jones Industrial Average

jumped 191 points, or 1.6%, at 12,258. The

S&P 500

finished higher by 22 points, or 1.7%, at 1331, and the

Nasdaq

gained 51 points, or 1.8%, at 2799.

Caterpillar

(CAT) - Get Report

,

American Express

(AXP) - Get Report

and

Pfizer

(PFE) - Get Report

led the Dow higher.

AT&T

(T) - Get Report

,

Verizon

(VZ) - Get Report

and

Hewlett Packard

(HPQ) - Get Report

were the only Dow components that finished in the red.

An unexpectedly strong jobless claims report boosted investor optimism Thursday, temporarily relegating concerns about geopolitical tensions and rising oil prices to the background.

Initial jobless claims shed 20,000 to 368,000 in the week ended Feb. 26, from 388,000, previously. The level was better than the increase to 400,000 from last week's initially reported level of 391,000 that economists had been expecting, according to Briefing.com.

The data showing claims at their lowest level since May 2008 comes a day ahead of the

government's highly anticipated February non-farm payrolls report for which economists are projecting job gains of 200,000. On Wednesday,

Automatic Data Processing

said the private sector saw better-than-expected job growth of 217,000 in February.

Also on Thursday, the Institute for Supply Management said activity in the

services sector grew at a faster pace than expected in February as its non-manufacturing ISM index rose to 59.7, from 59.4 in January. A reading above 50 indicates expansion. Economists had expected a February reading of 59, according to Briefing.com.

"I think that after Tuesday we went from focusing on Libya and oil to focusing on jobs," said Marc Pado, U.S. market strategist at Cantor Fitzgerald. Pado said the strong ADP number, better-than-expected jobless claims, positive February same-store sales and an increase in the labor component of the ISM services index were all building expectations for significant job growth on Friday.

"We've known manufacturing has been strong, it was really the services side of the equation that was in question this morning, so all the numbers that came out today pointed to signs that the jobs number will be good tomorrow."

Additionally, Pado said technical buying was "adding fuel to the fire" since Wednesday's low didn't break last week's low and held above all the indices' 10-week moving averages.

More than 1.07 billion shares traded on the

New York Stock Exchange

, 76% of which advanced, while 21% declined. On the Nasdaq, 2.01 billion shares changed hands.

Oil prices retreated slightly Thursday, a day after oil closed above $102 a barrel for the first time in more than two years, amid

reports that Libyan dictator Moammar Gadhafi has accepted Venezuela's offer to mediate Libya's crisis. Oil prices were still hovering above $100 a barrel, with the April crude contract shedding 32 cents to settle at $101.91.

Libyan warplanes struck the oil terminal town Brega and Gadhafi loyalists have been pushed back to Ras Lanuf, another important oil terminal, east of Tripoli.

President Barack Obama

called for Gadhafi to step down

on Thursday, saying he has "lost the legitimacy to lead," and said he's sending civilian and military aircraft to the region to help with the evacuation of refugees.

Elsewhere in commodity markets, the April gold contract shed $21.30 to settle at $1,416.40 an ounce.

Shares of

Kroger

(KR) - Get Report

rose 2.2% to close at $23.02 after the supermarket operator topped analysts' profit estimates by 2 cents with earnings of 46 cents a share and issued year-end guidance that was in line with Wall Street's expectations.

Sports retailer

Zumiez

(ZUMZ) - Get Report

gained 5.5% at $27.36 after the company said same-store sales jumped 12.8% in February.

Shares of

Big Lots

(BIG) - Get Report

surged 3.6% to $41.33 after the

closeout retailer said fourth-quarter earnings rose more than 4% and sales gained nearly 4%.

Wendy's/Arby's

(WEN) - Get Report

saw its shares rose 7.6% to $5.10 after it reported narrower losses and said it expects sales at Wendy's to rise 1% to 3% this year after declining in the previous year.

The stock of

US Airways

(LCC)

was flying high after the airline said it said that the demand environment was "exceptionally strong" and that it would be able to absorb the increase in fuel prices. Shares jumped 5% to close at $8.36.

Tesoro

(TSO)

,

Valero

(VLO) - Get Report

,

Coventry Health

(CVH)

,

Teradata

(TDC) - Get Report

and

Peabody Energy

(BTU) - Get Report

were outperformers on the S&P 500.

A co-founder of

Twitter

told

Reuters

that

the site has no plans to go public anytime soon despite recent reports that

Google

(GOOG) - Get Report

and

Facebook

have held talks about acquiring the microblogging site.

The benchmark 10-year Treasury fell 26/32, lifting the yield to 3.568%. The dollar weakened against a basket of currencies with the dollar index down by 0.1%.

.

Overseas, the

European Central Bank kept rates unchanged at 1.00%, but ECB President Jean-Claude Trichet said an increase in rates is possible at its next meeting since inflation risks in the euro zone are rising.

Hong Kong's Hang Seng gained 0.3% and Japan's Nikkei rose 0.9%. London's FTSE soared 1.5% and the DAX in Frankfurt finished 0.6% higher.

--Written by Melinda Peer and Shanthi Bharatwaj in New York

.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.