Unemployment Down, Stocks Soar [Updated]

[Updated | Sept. 29, 2:51 p.m. PDT: It was another good day on Wall Street on Thursday. The Dow gained 143 points, even though the highest peak of the day was 260.]

The government raised its estimate of how fast the U.S. economy grew this spring as new applications for unemployment benefits fell to a five-month low Thursday.

Stocks also soared as the Dow shot up 215 points in early trading. The Standard & Poor's 500 index and the Nasdaq were also sharply higher.

"This gives us a little more confidence that maybe the economy will muddle through here as we go through all these challenges," said Rob Lutts, president and chief investment officer of Cabot Money Management.

First-time applications for unemployment benefits fell last week to 391,000. That's the lowest level since April 2 and also the first time applications have fallen below 400,000 since Aug. 6. The big drop suggests that layoffs are decreasing.

The government also increased its estimate of economic growth in the April-June period. The Commerce Department said the economy grew at a 1.3 percent annual rate in the second quarter, up from its previous estimate of 1 percent. It attributed the increase to growth in consumer spending and trade.