NEW YORK (MarketWatch) — U.S. stocks rose sharply Thursday, with the S&P 500 index rebounding after a five-session losing spell, after Spain detailed an austerity plan that focuses on spending cuts instead of tax increases and stronger-than-expected data on the U.S. jobs market.

“Looks like we have bias to the upside, and this, starting on a day when we had riots and fires in Spain and Greece, then lo and behold, Spain perseveres and the market loves it,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

The jobs data was “a nice little boost, but it was more the developments in Spain that got the market moving, the austerity measures they are proposing are more stringent that what the EU [European Union] was initially looking for,” said Ablin.

Dialing back from a 109-point advance, the Dow Jones Industrial Average DJIA, -0.47% ended up 72.46 points, or 0.5%, to 13,485.97, with 23 of its 30 components advancing.

Snapping its longest loss streak since July, the S&P 500 SPX, -0.48% added 13.83 points, or 1%, to 1,447.15, with technology, energy and financials leading gains that included all but utilities of its 10 major sectors.

Both the Dow and S&P 500 had their best session since the Federal Reserve two weeks ago said it would engage in a third round of quantitative easing, this time with monthly purchases of mortgage-backed securities. The Dow is up 4.7% for the nearly ended quarter; the S&P 500 is ahead 6.2%.

The Nasdaq Composite COMP, -0.29% climbed 42.90 points, or 1.4%, to 3,136.60, leaving it up 6.9% for the third quarter, with one trading session remaining.

For every stock sliding more than three gained on the New York Stock Exchange, where 634 million shares traded. Composite volume topped 3.1 billion.

The dollar DXY, +0.06% fell against other currencies including the euro and commodities gains, with the price of a barrel of oil CLX22, -2.17% back near $92 a barrel, with futures for November delivery closing at $91.85 a barrel, up $1.87.

Help found

Initial jobless claims last week fell by 26,000 to 359,000, the lowest since late July, while revised government figures found the U.S. economy created 386,000 additional jobs from March 2011 to March 2012 than previously thought. Read more about revised estimate.

“Right now, employment is what matters,” Dan Greenhaus, chief global strategist at BTIG LLC in New York, said of a drop in applications for jobless benefits.

“When the unemployment rate fell, a lot of people were saying that’s because of people dropping out of the jobs market, which was true, but part of it was there were a lot more jobs than we thought,” said Greenhaus at BTIG.

Other reports showed the U.S. economy grew less than expected in the second quarter, and separately, a rise in demand for capital goods in August did not make up for drops the prior two months. Orders for non-defense capital equipment excluding airplanes climbed 1.1% while total orders for durable goods fell 13%. See: Durable-goods orders sink 13% in August.

Of the three reports, “the most important is the jobless claims number. GDP is backwards looking” and the durable goods “headline stunk, but we knew it would,” said Greenhaus.See: Q2 GDP growth cut to 1.3%.

Separately, the National Association of Realtors reported pending-home sales retreated in August from a two-year high the prior month.

Spain cuts

In Madrid, Spanish Prime Minister Mariano Rajoy’s government announced an austerity plan to reduce the nation’s budget deficit, with the 2013 goal 4.5% of gross domestic produce versus a 6.3% target in 2012.

“I don’t see anything particularly new in the Spanish budget that should be scaring U.S. investors, but it is confirmation Europe is still moving in the wrong direction,”said David Kelly, chief market strategist at J.P. Morgan Funds. See: What you need to know on Spain's budget.

“Spain needs to be on an austerity plan in order to have the continued protection of the ECB [European Central Bank] in the sovereign bond market. But there’s no point in trying to have an austerity budget in an economy with an unemployment rate already in the 20% range,” Kelly added.

That said, “We don’t export that much to Europe, and the ECB does stand behind the financial system,” said Kelly of the minimal impact on investors in U.S. equities.

Global equities were also supported by China moving to bolster confidence with additional financial liquidity and reports of other, modest stimulus plans. See: China unveils small policy steps, no bazooka.

Moving issues

Goodyear Tire & Rubber Co. GT, -1.29% advanced 3.9% after Goldman Sachs raised its rating to buy from neutral.

Discover Financial Services DFS, -1.45% rose 7.3% after the credit-card provider reported third-quarter profit that topped Wall Street estimates.