Much of the pain from the first two months of 2016 melted away on Thursday as the Dow Jones Industrial Average climbed high enough to wipe out its year-to-date losses.
The S&P 500, which climbed 0.66%, didn't quite make it, and the Nasdaq, which added 0.46%, is still almost 5% lower than at the end of last year. The blue-chip Dow Jones index rose 0.32%.
Wall Street's gains were driven by a rally in crude oil prices that boosted energy stocks as well as residual goodwill following a dovish Federal Reserve meeting that ended Wednesday.
Commodity traders cheered after oil closed above $40 for the first time this year. West Texas Intermediate crude jumped 4.5% to $40.20 a barrel on Thursday, adding to a massive rally a day earlier.
"The crude complex is capitalizing on yesterday's gains with another venture into positive territory as U.S. crude fundamentals lend additional support to the prospect of an OPEC production freeze," Austin Sapp, commodity analyst at Schneider Electric, explained in a note.
The energy sector was one of the top performers. Major oilers Exxon Mobil (XOM) , Chevron (CVX) , ConocoPhillips (COP) and Royal Dutch Shell (RDS.A) climbed, while the Energy Select Sector SPDR ETF (XLE) added 1.4%.
Investors were still feeling bullish after after the Fed left rates unchanged on Wednesday, a move Fed Chair Janet Yellen described as "prudent." Only one hawk, Kansas City Fed President Esther George, voted to raise rates.
The central bank now expects two rate hikes this year, down from December's forecast of as many as four. The Fed also cut its forecasts for next year's hikes by 50 basis points.
The number of new applications for unemployment benefits rose last week, though it remained near multi-year lows. Weekly jobless claims climbed 7,000 to 265,000, while the less-volatile four-week average rose 750 to 268,000. Analysts had expected the weekly claims number to reach a higher 268,000.
Manufacturing activity in the Philadelphia area returned to positive territory in March for the first time in seven months. The Philadelphia Fed manufacturing index improved to 12.4 this month, far better than a reading of negative 2.8 last month. Economists had expected a reading of negative 0.5.
Caterpillar (CAT) was 2% higher despite cutting its earnings and revenue outlook for the first quarter, saying it expects adjusted earnings of 65 cents to 70 cents a share. Analysts forecast profit of 97 cents. The company, which has been pressured by weaker demand stemming from lower commodity prices, still maintained its previous forecast for the full year. The stock rose 0.7%.
In earnings news, Williams-Sonoma (WSM) was 6% lower after issuing a disappointing outlook. The housewares retailer expects first-quarter earnings of no higher than 52 cents a share, 3 cents short of consensus. Fourth-quarter earnings of $1.55 a share also missed estimates. Williams-Sonoma approved a $500 million share buyback program.
FedEx (FDX) climbed 12% after releasing a better-than-expected forecast thanks to lower oil prices, which boosted margins. The delivery company expects full-year earnings to climb from 20% to 22%.
Guess (GES) tumbled 14% after projecting a sales decline in its first quarter. The retailer anticipates a quarterly loss between 17 cents and 20 cents a share, while revenue is expected to dip 0.5% to 1.5%.