NEW YORK—Investors rushed back into stocks as profits at a handful of companies indicated the economy might be gaining strength.

Homebuilders and retailers led a broad rally Thursday. The Dow Jones industrial average surged 173 points after four days of losses. The price of government debt jumped after an auction drew strong demand.

The day began with better-than-expected earnings reports. Lennar Corp.’s orders for new homes jumped 63 percent during the second quarter and its revenue beat expectations.

And retailers jumped following a report from Bed Bath & ...

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