Dow surges 423 points (ext.)

NEW YORK (CNNMoney) -- Rebound! Stock markets continued their schizophrenic week Thursday as all three indexes surged on positive earnings and labor market news.

The Dow Jones industrial average (INDU) jumped 423 points, or 3.9%, to close at 11,143.

The S&P 500 (SPX) added 51 points, or 4.6%, and the Nasdaq (COMP) rose 111 points to close 4.7% higher.

Optimism returned on Thursday -- but even with the Dow's spike, the index remains lower for the week.

Thursday's rally was driven by a report showing jobless claims fell to a four-month low, and by Cisco Systems' better-than-expected guidance for the current quarter. Shares of Cisco (CSCO, Fortune 500) jumped 16%, making the stock a top performer in all three major indexes.

"Investors are looking for any signs that the United States will be able to avert a double-dip recession," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

Investors may also be coming back into the market since the steep drops recently have pushed stocks near record-low valuations, said Donald Selkin, chief market strategist at National Securities.

Stocks also got a boost after news reports sparked speculation that France and Italy might place a ban on short-selling. In addition, French President Nicolas Sarkozy and German Chancellor Angela Merkel said Thursday they were calling another emergency meeting to discuss the crisis.

The dollar fell against the euro, the Japanese yen and British pound.

Gold futures for December delivery fell $32.80 to $1,751.50 an ounce, after setting an intraday record high of $1,817.60 an ounce.

Oil for September delivery rose $2.83 to settle at $85.72 a barrel.