Worries about the world's top economy sparked by a below-par factory gauge earlier this week appear to have been superseded by renewed optimism that an extended period of elevated borrowing costs is finally kicking in.
Figures from payroll firm ADP on Wednesday showed private-sector hiring slowed far more than estimated in May.
That came a day after news that job openings had fallen more than expected and pointed to a softening labour market, a key goal of Fed officials along with falling inflation.
The data fanned hopes that the Fed can start to cut interest rates from their two-decade highs, and traders have priced in almost two before the end of 2024, with some pencilling in September for the first.
"Momentum continues as US data starts to weaken... possibly supporting earlier rate cuts from the Fed this year," said Charu Chanana at Saxo.
Investors are now set up for the release of the crucial non-farm payrolls report, which is due Friday and should provide a clearer snapshot of the labour market and the US economy.
That comes ahead of next week's Fed policy meeting, where it will also unveil its latest "dot plot" of rate expectations.
Its previous guidance -- in March -- was for three cuts but many are preparing for that to be whittled down in light of recent data showing inflation remains sticky and decision-makers' reluctance to move too early.
"The 'dots' are likely to cluster around one or two interest rate cuts this year," Capital Economics' Stephen Brown said.
"Nevertheless, as inflation falls a bit faster than officials expect and (gross domestic product) growth disappoints, our base case remains that the Fed will cut in September."
Optimism over a rate cut has been boosted by news that Canada's central bank had done so on Wednesday, while the European Central Bank is expected to later on Thursday.
All three main indexes on Wall Street advanced, with the S&P 500 and Nasdaq hitting fresh records.
The rally in New York came on the back of a surge in tech titans including chip-making darling Nvidia, which became only the third US company in history to break $3 trillion in market capitalisation, after Apple and Microsoft.
Asian markets built on the gains, with Hong Kong, Tokyo, Shanghai, Sydney, Singapore, Taipei, Manila and Jakarta all enjoying buying interest.
Mumbai futures rose after Indian Prime Minister Narendra Modi formed a coalition government -- having lost his majority in the country's general election -- raising hopes he will be able to push through economy-boosting measures.
Shares in India have swung wildly between big gains and losses this week after exit polls pointing to a landslide for Modi's Bharatiya Janata Party (BJP) were proved wrong.
- Key figures around 0230 GMT -
Tokyo - Nikkei 225: UP 0.9 percent at 38,841.75 (break)
Hong Kong - Hang Seng Index: UP 1.0 percent at 18,616.78
Shanghai - Composite: UP 0.3 percent at 3,075.88
Dollar/yen: DOWN at 155.70 yen from 156.12 yen on Wednesday
Euro/dollar: UP at $1.0889 from $1.0873
Pound/dollar: UP at $1.2803 from $1.2789
Euro/pound: UP at 85.05 pence from 85.00 pence
West Texas Intermediate: UP 0.6 percent at $74.50 per barrel
Brent North Sea Crude: UP 0.4 percent at $78.74 per barrel
New York - Dow Jones: UP 0.3 at 38,807.33 (close)
London - FTSE 100: UP 0.2 percent at 8,246.95 (close)
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