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Eli Lilly ( LLY ) gains after lifting annual sales forecast

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Under Armour ( UAA ) rallies on better-than-feared Q1 results

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Indexes: Dow up 1.8%, S&P 500 up 2.3%, Nasdaq up 2.9%

(Updates to 4:15 p.m. ET)

By Caroline Valetkevitch

NEW YORK, Aug 8 (Reuters) - U.S. stocks jumped on

Thursday, with the Nasdaq and S&P 500 each ending more than 2%

higher after jobless claims fell more than expected in the

latest week, soothing worries the labor market was weakening too

quickly.

All the major S&P 500 sectors rose, led by gains in

technology and communication services.

Small-cap stocks also rallied, with the Russell 2000 index

climbing 2.4%.

Among the S&P 500's biggest gainers, shares of Eli Lilly ( LLY )

jumped 9.5% after the drugmaker raised its annual profit

forecast, and sales of its popular weight-loss drug Zepbound

crossed $1 billion for the first time in a quarter.

Data showed the number of new applications last week for

unemployment benefits fell more than expected.

"This was the data point for the week, so it took on added

importance," said Paul Nolte, senior wealth advisor and market

strategist for Murphy & Sylvest in Elmhurst, Illinois.

"Our reading on this is the labor market continues to be

OK... The recession fears at this point are probably a little

overblown."

Stocks had sold off sharply after last week's July U.S.

jobs report sparked fears of a potential U.S. recession. Traders

also cited an unwinding of positions of carry trades, where

investors borrow money from economies with low interest rates to

fund their bets in high-yielding assets elsewhere.

The Dow Jones Industrial Average rose 683.04

points, or 1.76%, to 39,446.49, the S&P 500 gained 119.81

points, or 2.30%, to 5,319.31 and the Nasdaq Composite

added 464.22 points, or 2.87%, to 16,660.02.

The Cboe Volatility index, Wall Street's fear

gauge, was down on Thursday.

"Once volatility gets going, it takes a while for it to calm

down," said David Lundgren, chief market strategist and

portfolio manager at Little Harbor Advisors in Marblehead,

Massachusetts.

"The fact that we're up a lot doesn't necessarily mean the

lows are in or that we're going straight up from here," he said.

"But looking out three months, six months the tendency to

experience above-average returns is very high."

The second-quarter earnings season is winding down, but

investors are watching final results closely after some

disappointments earlier in the reporting period.

Shares of Under Armour ( UAA ) surged 19.2% after the sports

apparel maker posted a surprise first-quarter profit, benefiting

from its efforts to cut inventory and promotions.

Volume on U.S. exchanges was 11.98 billion shares, compared

with the 12.60 billion average for the full session over the

last 20 trading days.

Advancing issues outnumbered declining ones on the NYSE by a

3.59-to-1 ratio; on Nasdaq, a 2.76-to-1 ratio favored advancers.

The S&P 500 posted 7 new 52-week highs and 4 new lows;

the Nasdaq Composite recorded 32 new highs and 183 new lows.