U.S. stock indexes climbed on Thursday after upbeat annual forecasts from several retailers, while data confirmed the U.S. economy contracted in the first quarter, easing concerns about aggressive interest rate hikes.

All of the 11 major S&P sectors advanced in early trading, with consumer discretionary up 3%, followed by a 1.7% rise in the financials sector.

Macy's Inc jumped 12.1% after the department store raised its annual profit forecast, as party-wear demand rebounds.

Dollar General Corp and Dollar Tree gained 13.2% and 17.8% respectively, after raising their annual sales forecasts, as more Americans turn to discount store shopping with inflation at a four-decade high.

Meanwhile, the Commerce Department's report showed U.S. gross domestic product fell at a 1.5% annualized rate last quarter, revised down from the 1.4% decline reported in April under the weight of a record-trade deficit. The economy grew at a robust 6.9% pace in the fourth quarter.

Separately, weekly jobless claims fell to 210,000 last week, consistent with a tight labor market despite rising interest rates and tightening financial conditions.

"These numbers are indicative that growth is slowing, demand is slowing and maybe prices are even starting to slow. And if all those three things are in place, then the case for a dovish pivot will build over the summer months," said Thomas Hayes, chairman of Great Hill Capital.

The report came a day after the minutes of the Federal Reserve's May meeting showed most policymakers backed rate hikes of 50 basis points in June and July to tame inflation, but appeared flexible to possibly change course in September.

Markets have sold off sharply this year on growing worries about an economic slowdown due to aggressive Fed policy moves aimed at reining in surging prices. The war in Ukraine, pandemic-related lockdowns in China and recent dismal earnings forecasts have also weighed down markets.

The blue-chip Dow and the benchmark S&P 500 have lost 10.5% and 15.4% year-to-date, while the tech-heavy Nasdaq has fallen 25.9% as high-multiple growth stocks took a hit from rising interest rates.

"The reality is a lot more complicated at this juncture and so we will have these counter trend rallies in any bear market environment," said Hans Olsen, chief investment officer of Fiduciary Trust Company.

At 10:06 a.m. ET, the Dow Jones Industrial Average was up 442.60 points, or 1.38%, at 32,562.88, the S&P 500 was up 55.00 points, or 1.38%, at 4,033.73, and the Nasdaq Composite was up 162.14 points, or 1.42%, at 11,596.89.

U.S.-listed shares of Alibaba Group jumped 11.5% after the company posted upbeat fourth-quarter revenue on growing demand for some of its niche online shopping services in China.

Advancing issues outnumbered decliners by a 7.18-to-1 ratio on the NYSE and a 3.32-to-1 ratio on the Nasdaq.

The S&P index saw three new 52-week highs and 29 new lows, while the Nasdaq recorded 19 new highs and 66 new lows.