U.S. blue-chip stocks notched a massive advance Thursday, as investors seized on favorable corporate and economic reports to recover most of the ground they lost in the previous session.

The blue-chip Dow Jones Industrial Average soared 423.37 points, or 3.95%, to 11143.31. It was the fourth straight move of 400 points or greater, a first in the Dow's history. The action followed Wednesday's 520-point slump, the ninth-largest point drop ever, amid mounting worries about the health of Europe's banks and the chances of a global economic recession.

The Standard & Poor's 500-stock index jumped 51.88 points, or 4.63%, to 1172.64, led by battered financial stocks. The Nasdaq Composite surged 111.63 points, or 4.69%, to 2492.68.

Thursday's two big catalysts were a rare favorable weekly employment report and signs of a turnaround at networking-equipment maker Cisco Systems. The absence of troublesome new developments in European sovereign debt and banking also helped. Markets have swung violently this week and last as investors weighed the chances of a global economic recession and fretted over further debt turmoil on two continents.

While the huge swing to the upside relieved some investors, to others it was more a symptom of the extreme volatility that has gripped markets of late.

"It's great to have these up days, but I think that we are going to continue to be in a choppy period with these big swings," said Margaret Patel, senior portfolio manager at Wells Capital Management. "The reason we had our meltdown was really over in Europe. It made the markets look like one of the dark days in 2008, melting away with no rhyme or reason."

Cisco Systems was the strongest blue-chip stock, surging 16% after its late Wednesday earnings report. Chief Executive John Chambers said the company was making "solid progress" on its turnaround effort. Bank of America, which slumped 11% Wednesday, was the second strongest, rising 7.1%.

The number of people claiming new jobless benefits fell last week to the lowest level in four months, dropping to a seasonally adjusted 395,000 in the week ended Aug. 6., a small bright spot in a persistently weak U.S. labor market that boosted investor sentiment Thursday.

Downward pressures from Europe eased following reports that the Continent's markets may ban so-called naked short selling, which could relieve some of the immediate stress on stocks. In a "naked" short, investors sell a financial instrument without first borrowing it. Europe stocks finished sharply higher.

Major indexes were still creaking under the weight of the recent market downdraft. The blue-chip Dow fell nearly 12% for the month as of Wednesday's close, while the S&P 500 shed 13% and the Nasdaq lost nearly 14% heading into Thursday's session.

The recent volatility has been accompanied by unusually high volume. Daily volume has been more than twice the 2011 average in recent sessions.

In corporate news, AOL gained 12% after announcing a $250 million stock-repurchase program, while Advance Auto Parts climbed 8.4% after besting earnings estimates and upping its share repurchase authorization.

News Corp. surged 18%. The company reported a smaller fiscal fourth-quarter profit but raised its semiannual dividend 27% on Wednesday, as executives seek to assure investors that the phone-hacking scandal shaking its U.K. properties has had little to no effect on the overall business. News Corp. owns Dow Jones & Co., publisher of The Wall Street Journal and this newswire. Read More