Stocks rose Thursday as investors cheered more positive economic data, easing fears that the Federal Reserve may have overstepped in its recent policy decision. The Dow Jones Industrial Average climbed over 260 points, with the S&P 500 Index rose 0.4% to a fresh closing high of 5,745.35. The tech-heavy Nasdaq Composite also advanced 0.6%, led by gains across the semiconductor industry.

Here's how the market settled on Thursday:

S&P 500 Index (SPY  ): +0.40% or +23.11 points to 5,745.37

Dow Jones Industrial Average (DIA  ): +0.62% or +260.36 points to 42,175.11

Nasdaq Composite Index (QQQ  ): +0.60% or +108.09 points to 18,190.29

In Focus:

Wells Fargo Investment Institute Senior Global Market Strategist Scott Wren wrote in a Wednesday note that the Federal Reserve's new rate-cutting cycle is expected to be positive for both Wall Street and the U.S. economy.

"We expect this series of rate reductions to help spark broader market opportunities next year," Wren wrote. "While we are looking for the economy to slow to a more moderate pace into year-end, our base cases does not include a recession."

Wren forecasts that policymakers could cut rates by at least 200 basis points by the end of next year, but cautioned the potential headwinds related to rising geopolitical tensions and the outcome of the U.S. presidential election could impact policy.

In Economic News:

Initial Unemployment Claims totaled a less-than-expected 218,000 for the week ended Sept. 21, the Labor Department reported Thursday, falling by 4,000 compared to the previous week. Continuing claims, which are tracked a week behind, were also below estimates at a total of 1.834 million.

U.S. Gross Domestic Product (GDP) grew at a 3% annualized pace in the second quarter, the Bureau of Economic Analysis reported in its third estimate, remaining unchanged from its second estimate. The latest estimate confirms that second-quarter economic growth was faster than the first-quarter's 1.4% annualized growth.

"The revisions only strengthen our conviction that the U.S. economy will continue to expand at a decent pace over the coming year, which suggests labor market conditions are unlikely to deteriorate markedly from here," Michael Pearce, deputy chief economist at Oxford Economics, wrote in a note to clients on Thursday.

On the Earnings Front:

Micron Technology (MU  ) shares rose higher Thursday after the chipmaker reported better-than-expected fiscal fourth-quarter results and issued a strong first-quarter revenue forecast thanks to higher demand for memory chips in artificial intelligence computing.

The company expects current quarter revenue of about $8.7 billion, plus or minus $200 million, and an increase in gross margin of about 39.5%. Micron also expects first-quarter adjusted profit of $1.74 per share, plus or minus $0.08.

"With the advent of AI, we are in the most exciting period that I have seen for memory and storage in my career," CEO Sanjay Mehrotra said during a call with analysts late Wednesday. "Demand from data center customers continues to be strong and customer inventory levels are healthy."

Micron expects the market for high-bandwidth memory (HBM) chips used in AI data centers to increase to $25 billion in 2025 -- up from $5 billion this year.

Shares of ASML Holding (ASML  ), Applied Materials (AMAT  ), Lam Research (LRCX  ) and Nvidia (NVDA  ) also rose higher on Micron's strong forecast; Micron is the first semiconductor company to report earnings for this quarter cycle.

In the News:

Super Micro Computer (SMCI  ) plunged over 10% lower Thursday after a Wall Street Journal report said the information technology company is being investigated by the Department of Justice. The report, which cites people familiar with the matter, said that a former employee accused the company of accounting manipulations, echoing Hindenburg Research's report last month.

Southwest Airlines (LUV  ) raised its third-quarter revenue forecast Thursday, now expecting unit revenue to increase as much as 3% over the same period last year, up from previous guidance of a decline of as much as 2%. The airline's board also authorized $2.5 billion in share buybacks and plans to change its business model in effort to resist activist Elliott Investment Management.

For Friday:

All eyes will be on August's personal consumption expenditures reading due out Friday morning, as well as September's final consumer sentiment reading. Costco Wholesale (COST  ) is also set to deliver fiscal fourth-quarter results after closing bell on Thursday.