U.S. stocks rose sharply Thursday morning after a temporary truce in the debt-ceiling standoff in Congress relieved concerns of a possible government debt default, while a dip in oil prices eased worries of higher inflation. At 10:10 a.m. EST, the Dow was up 488.07 points (1.39%), and the Nasdaq gained 214.23 points (1.48%).

Top U.S. Senate Republican Mitch McConnell on Wednesday floated a plan to support an extension of the federal debt ceiling into December, potentially heading off a historic default. Congressional Democrats and Republicans were expected to continue negotiating on Thursday.

"I didn't think there is actually going to be a default, it is a low probability, high severity possibility. And since that's been removed from the market, I'm not surprised to see this bounce in futures," said Greg Swenson, founding partner of Brigg Macadam.

Mega-cap stocks were back in action - Apple Inc, Amazon.com Inc, Microsoft Corp and Alphabet Inc rose between 1.0% and 1.5% amid a dip in the benchmark U.S. 10-year Treasury yield on Thursday.

All of the 11 major S&P 500 sectors rose in the first half hour of trading, with financials, technology, materials, industrials, healthcare and consumer discretionary gaining more than 1%.

Wall Street's main indexes are now set for weekly gains, recovering from bouts of selling pressure in high-growth stocks earlier in the week when Treasury yields soared.

"I'm not worried about the markets in the near term and buying dips is advisable," Swenson said.

European and Asian stocks rose earlier in the day after cooling oil and gas prices offered relief to investors worried about runaway inflation. The S&P 500 energy sector index lagged its peers to only rise 0.6%.

Data showed 326,000 Americans filed new claims for jobless benefits last week, below a forecast by economists polled by Reuters of 348,000 applications. It also showed layoffs increased from a 24-year low in September.

This comes after a survey from the ADP National Employment Report showed a strong increase in private payrolls in September and ahead of the more comprehensive non-farm payrolls data due on Friday. It is expected to cement the case for the Federal Reserve's slowing of asset purchases.

Levi Strauss & Co jumped 7% after the jeans maker beat third-quarter revenue and profit estimates, boosted by an uptick in demand for jeans as people refreshed their wardrobes.

Snap Inc gained 2.8% after launching an in-app tool to educate users about the dangers of drugs.

Conagra Brands Inc rose 0.2% as it beat quarterly revenue expectations after raising prices for its frozen meals and snacks.

Advancing issues outnumbered decliners by a 4.52-to-1 ratio on the NYSE and by a 4.04-to-1 ratio on the Nasdaq.

The S&P index recorded 23 new 52-week highs and three new lows, while the Nasdaq recorded 42 new highs and 33 new lows.