NEW YORK—U.S. stocks surged in Thursday morning trading, as investors eyeing a rare dose of encouraging employment data and stronger revenue at Cisco Systems took back some of the ground lost in the recent stock-market swoon.

The blue-chip Dow rose 274 points, or 2.6%, to 10996 in late-morning trading. The Dow slumped 520 points on Wednesday, the ninth-largest point drop in history, 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 32 points, or 2.8%, to 1152, led by battered financial stocks. The Nasdaq Composite surged 73 points, or 3.1%, to 2454.

Weekly jobless-claims data released before the open showed that the number of people claiming new jobless benefits in the U.S. fell slightly last week, a small bright spot in a persistently weak U.S. labor market.

Cisco also helped set the positive tone. The networking-equipment maker was by far the best-performing blue-chip stock, surged 17% after posting better-than-expected revenues. The company’s earnings report was viewed as suggesting he company is weathering an uncertain market. Chief executive John Chambers said the company was making “solid progress” on its turnaround effort.

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.

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