The Dow added 1.4%, the S&P 500 climbed 1.6% and the Nasdaq soared more than 2.3%.
Retail sales increased 1% in July, the biggest jump in a year and a half.
That eased fears of a sharp economic slowdown fanned by a jump in the unemployment rate.
A separate reading Thursday showed the number of Americans filing new applications for unemployment benefits fell unexpectedly last week.
And investors cheered retail bellwether Walmart after it raised its annual profit forecast for the second time this year, sending its shares up more than 6.5%.
Carol Schleif is chief investment officer at BMO Family Office.
"The markets are clearly reacting positively to another sweet, a triple trifecta, if you will, of more positive data, or viewed as more positive. And the market's definitely taking it as good news means good news, in that you saw strong retail sales, you saw a strong report from one of the key retailers. And we've got jobless claims that were in line basically with an economy that's functioning very well."
Among other movers, Cisco Systems rose 6.8% after it forecast better-than-expected first-quarter revenue and said it was cutting 7% of its global workforce.
Nike climbed 5% as billionaire investor Bill Ackman took new stakes in the sportswear company.
And Ulta Beauty jumped more than 11% after Warren Buffett's Berkshire Hathaway acquired a stake in the cosmetics store chain.
