A better-than-expected reading on the gross domestic product soothed investors' economic worries Thursday, sending stocks sharply higher on the expectation of robust second-quarter earnings.

The positive economic data was well received, a notable change from recent months when the buoyant economy made investors concerned over rising interest rates and the possibility of inflation. It also calmed a market that only Wednesday was worried that the economy might be slowing too much.

Investors were also encouraged by a decline in weekly jobless claims and easing oil prices.

John Lynch, chief market analyst at Evergreen Investments, said fears over interest rates and inflation have largely worked their way through the markets, with investors finally focusing on positive signs including strong consumption and business spending. "The perception of bad stuff has been priced in," Lynch said.

The Dow Jones industrial average rose 95.31, or 0.9 percent, to 10,205.20. The Standard & Poor's 500-stock index gained 6.34, or 0.6 percent, to 1121.28, and the Nasdaq composite index rose 8.35, or 0.4 percent, to 1984.50.

Before the market opened, the Commerce Department reported that the economy grew at a 4.4 percent annual rate in the first quarter. The solid growth rate was slightly faster than the 4.2 percent pace first estimated a month ago as well as the 4.1 percent growth rate registered in the final quarter of 2003. Separately, the Labor Department said new applications for unemployment benefits dropped last week by a seasonally adjusted 3,000, to 344,000. Oil prices also eased, slipping below the $40-a-barrel mark, easing another source of worry for investors.

Home Depot gained 38 cents, to $35.84, after the home-improvement retailer announced that it was increasing its quarterly dividend by 25 percent and authorizing a $1 billion share repurchase plan. Costco Wholesale, another major retailer, rose 63 cents, to $38.07, after the company reported that its net income surged 29 percent in the fiscal third quarter as sales and membership fees rose.

Boeing gained $1.44, to $46.20. The 3.2 percent rise was the biggest in the Dow average.

An index of energy companies lost 1.1 percent and was the only one of 10 S&P 500 groups to decline. Exxon Mobil dropped 18 cents, to $43.37, and was the biggest drag on the S&P 500. ChevronTexaco fell 77 cents, to $90.21.

Other Indicators

* The New York Stock Exchange composite index rose 57.16, to 6492.30; the American Stock Exchange index rose 6.68, to 1200.01; and the Russell 2000 index of smaller-company stocks rose 0.79, to 568.56.

* Advancing issues outnumbered declining ones by 9 to 4 on the NYSE, where trading volume rose to 1.44 billion shares, from 1.36 billion on Wednesday. On the Nasdaq Stock Market, advancers outnumbered decliners by 6 to 5 and volume totaled 1.62 billion, up from 1.58 billion.

* The price of the Treasury's 10-year note rose $4.69 per $1,000 invested, and its yield fell to 4.60 percent, from 4.66 percent on Wednesday.

* The dollar fell against the Japanese yen and the euro. In late New York trading, a dollar bought 110.99 yen, down from 111.75 late Wednesday, and a euro bought $1.2268, up from $1.2117.

* Light, sweet crude oil for July delivery settled at $39.44, down $1.26, on the New York Mercantile Exchange.

* Gold for current delivery rose to $394.90 a troy ounce, from $388.30 on Wednesday, on the New York Mercantile Exchange's Commodity Exchange.

Bloomberg News contributed to this report.