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Annual US gross domestic product growth was revised up to 3.7 percent from the 2.3 percent rate reported last month. Other data showed jobless claims fell more than expected last week, pointing to a steadily firming labor market.
While strong data points to increased chances of an interest rate hike in September, some investors said the recent volatility in markets triggered by fears of slowing growth in China could force the US Federal Reserve to hold back on a rate increase next month.
"Despite the good GDP numbers that we saw today, September largely seems off the table because of the turmoil that we've seen in the past week," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
However, he said recent data "certainly points to a possibility of a rate hike this year."
The market surged on Wednesday after New York Fed President William Dudley said the case for a September rate hike seemed "less compelling" than before.
The Fed, which meets on Sept. 16-17, has said it will raise rates only when it sees a sustained recovery in the economy.
A rate hike could put a stop to easy money that has helped fuel global markets in the past few years.
Kansas City Federal Reserve President Esther George, who has been arguing for a near-term U.S. rate hike, said the Fed should now take a "wait and see" approach to hiking rates due to market volatility and China's economic slowdown.
Investors will be keeping a sharp eye on an annual conference starting on Thursday of some of the world's top central bankers in Jackson Hole, Wyoming for further clues on the timing of a U.S. interest rate hike.
The market also got a rare dose of good news from China, where stocks snapped a brutal five-day losing streak.
At 9:39 a.m. ET (1339 GMT) the Dow Jones industrial average was up 225.48 points, or 1.38 percent, at 16,510.99, the S&P 500 was up 28.48 points, or 1.47 percent, at 1,968.99 and the Nasdaq Composite was up 74.27 points, or 1.58 percent, at 4,771.81.
All 10 major S&P sectors were higher, with the energy index's 2.2 percent rise leading the advancers as oil prices jumped more than 4 percent.
Shares in Apple, which helped lead the market higher on Wednesday, were up 1.5 percent at $111.29.
Tiffany was down 3.6 percent at $81.99 after the luxury jeweler forecast a surprise decline in full-year profit.
St Jude Medical rose as much as 15 percent in premarket trade after the Financial Times reported that Abbott Laboratories was preparing a $25 billion bid for the company.
But the stock pared much of those gains after an Abbott spokesman told Reuters it was not pursuing an offer. St Jude was up 4.7 percent at $72.61 just after the start of trading.
Tesla was up 4.2 percent at $233.92 after its Model S P85D received the highest possible score in test by influential magazine Consumer Reports.
Advancing issues outnumbered decliners on the NYSE by 2,476 to 285. On the Nasdaq, 1,938 issues rose and 441 fell.
The S&P 500 index showed no new 52-week highs and one new lows, while the Nasdaq recorded five new highs and 11 new lows.
