U.S. stocks surged Thursday afternoon, putting them on course to rack up big gains for a second straight day, as investors took advantage of this month's sell-off to add to their holdings. The stock market is rebounding from a sharp six-day slump that was triggered by concerns about the health of the Chinese economy.

Traders were encouraged by a surge in the Chinese stock market as the nation's main index logged its biggest gain in eight weeks. In the U.S., a report showed that the economy expanded at a much faster pace than previously estimated in the second quarter.

Energy stocks were among the biggest gainers as oil surged almost 10 percent, trading back above $40 a barrel.

The Dow Jones industrial average climbed 278 points, or 1.9 percent, to 16,565 as of 2:27 p.m. Eastern time. The Standard & Poor's 500 index gained 36 points, or 1.9 percent, to 1,975. The Nasdaq composite rose 79 points, or 1.6 percent, to 4,772.

U.S. stocks are rallying for a second day after logging their best performance in almost four years Wednesday, as the market bounced back from its six-day slump. The Dow has climbed almost 1,000 points in the last two days, pushing it into positive territory for the week, along with the S&P 500 and the Nasdaq.

The rally also pushed the tech-heavy Nasdaq back into positive territory for the year. The index is now up 1.4 percent.

"It looks to be more buying on depressed valuations," said Tim Dreiling, senior portfolio manager at U.S. Bank Private Client Reserve. "Capital comes back in, finding valuations to be more favorable than a week ago."

Financial markets have been volatile since China decided to weaken its currency earlier this month, a move investors interpreted as an attempt to bolster a sagging economy. Traders are also jittery about the outlook for interest rates. The Federal Reserve has signaled it could raise its key interest rate for the first time in nearly a decade later this year.

William Dudley, president of the New York Federal Reserve Bank, said Wednesday that the case for a U.S. interest rate hike in September is "less compelling" given China's troubles, falling oil prices and emerging markets weakness.

Given those headwinds, investors worry the economy could falter if the Fed raises rates too soon, chocking economic growth.

SECTOR VIEW: All of the 10 sectors in the S&P 500 rose, led by energy stocks. The sector rose 4.5 percent, paring its losses for the year to 20 percent.

COPPER-BOTTOMED: Freeport-McMoRan notched the biggest gain in the index. The copper producer said it is cutting spending, production and jobs as it deals with declining copper prices. Its stock climbed $2.43, or 30.1 percent, to $10.35.

STRONGER GROWTH: The Commerce Department said that the economy, as measured by gross domestic product, expanded at an annual rate of 3.7 percent in the April-June quarter. That's a much bigger rebound in growth during the spring that previously estimated, and the strongest growth since last summer.

DAZZLING RESULTS: Signet Jewelers jumped 13.7 percent after reporting earnings that surpassed the expectations of Wall Street analysts. The stock gained $16.59 to $137.88.

TASTY QUARTER: The J. M. Smucker Co. rose 6.5 percent after the food maker's fiscal first-quarter earnings beat financial analysts' forecasts. Smucker also gave a positive full-year outlook. Its shares gained $7.08 to $116.23.

EUROPEAN MARKETS: Germany's DAX gained 3.2 percent. France's CAC-40 increased 3.5 percent. Britain's FTSE 100 rose 3.6 percent.

ASIA'S DAY: The Shanghai Composite Index posted its first gain in six days, bouncing back from losses that triggered worldwide selling and wiped nearly 23 percent off its value over the past week. Hong Kong's Hang Seng advanced 2.9 percent to 21,697.31 and Tokyo's Nikkei 225 added 1.1 percent to 18,574.44.

ENERGY: Benchmark U.S. crude gained $3.60, or 9.4 percent, to $42.20 a barrel in New York. The contract fell 71 cents on Wednesday to close at $38.60.

BONDS AND CURRENCIES: U.S. government bond prices rose. The yield on the 10-year Treasury note fell to 2.16 percent. The dollar rose to 120.82 yen from Wednesday's 121.31 yen. The euro edged down to $1.1254 from the previous session's $1.1337.

METALS: Gold fell $2 to $1,122.60 an ounce. Silver rose 37.60 cents to $14.42 an ounce. Copper gained 8.6 cents to $2.33 per pound.