Wall Street surged on Thursday, with the blue-chip Dow back above 12,000 points, after European leaders agreed on a deal aimed at tackling the region's debt problems.
The Dow Jones industrial average gained 339.51 points, or 2.86 percent, to 12,208.55. It is the first time in nearly three months for the blue-chip index to settle above the key psychological level of 12,000.
All 30 Dow components settled firmly in positive territory, with Alcoa soaring more than 8 percent to lead the winners. Both Bank of America and JP Morgan Chase surged about 7 percent, also among the best performers.
The Standard & Poor's 500 jumped 42.59 points, or 3.43 percent, to 1,284.59, putting the index on track of its best month since 1974. The Nasdaq Composite Index soared 87.96 points, or 3.32 percent, to 2,738.63.
Investors breathed a sigh of relief after European leaders reached agreement early Thursday after 10 hours of negotiations. Although the full program cannot be finalized until early December, investors were glad to see that the 17-nation eurozone was finally taking a critical step in the right direction.
"The politicians are trying to tell the markets: Look, we are prepared to step up... And so, markets, you should believe we will do the same thing with Portugal, with Spain, if necessary with Italy," said Lawrence White, professor of economics at New York University's Stern School of Business.
The CBOE Volatility Index, widely considered as the best gauge of fear in the market, plunged almost 15 percent to finish near 25.
Other riskier assets also rose on Thursday. Gold futures climbed for the fifth straight session and ended at the highest level in five weeks. Crude soared more than 4 percent while both silver and copper soared more than 5 percent.
Adding to the surging momentum, data showed that the U.S. economy gained some much-needed strength in the third quarter.
The U.S. gross domestic product, the broadest measure of its economic health, grew at a 2.5-percent annual rate in the quarter, nearly doubled compared to the previous three months, thanks to stronger personal expenditure and business investment.
Although the number did not signal strong recovery, it certainly eased market concerns on a possible double-dip recession.
A separate report from the Labor Department showed the number of people applying for jobless benefits dipped by 2,000 to 402,000 last week, signaling limited improvement in the jobs market.