* Indexes poised for biggest 2-day gain since 2009
* 2nd-qtr GDP rose 3.7 pct vs earlier reading of 2.3 pct
* All 10 S&P sectors higher; led by energy
* Indexes up: Dow 1.54 pct, S&P 1.72 pct, Nasdaq 1.72 pct (Adds comment and other details, updates prices)
By Noel Randewich
Aug 27 (Reuters) - Wall Street rallied on Thursday as investors grew optimistic that the worst of recent market turmoil was over after strong U.S. economic data and hints that a September interest-rate hike was unlikely.
The three major indexes poised in afternoon trade for their biggest two-day gain since 2009, although they were down from earlier gains of more than 2 percent.
Data showed that the U.S. economy grew 3.7 percent in the second quarter - better than expected and much faster than the previous estimate of 2.3 percent.
The market had ended a 6-day losing streak on Wednesday after New York Fed President William Dudley said the case for a September hike was “less compelling” after recent market turmoil sparked by fears of slowing growth in China.
“The worst is probably behind us but it’s going to take a while before we get back to normal and we might still see some downward risk,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
Traders stuck with a view of a one-in-four chance that the Fed would increase interest rates in September even after the upgraded economic growth number.
Fed interest rates kept at near zero helped fuel the stock market to historic levels since the financial crisis.
Even if the Fed does not tighten policy in September, expectations of an eventual hike will remain a major overhang on sentiment, warned Jim Bianco, president of Bianco Research in Chicago.
“The era of easy money would officially be over,” Bianco said. “A rate hike would mean putting the needle away, no more drugs, time for the methadone.”
To that end, investors will keep an eye on an annual conference of some of the world’s top central bankers in Jackson Hole, Wyoming over the next few days for further clues on interest rates.
At 2:36 p.m., the Dow Jones industrial average was up 1.54 percent at to 16,536.11 and the S&P 500 was 1.72 percent higher at 1,973.91.
The Nasdaq Composite added 1.72 percent to 4,778.28.
All 10 major S&P sectors were higher, with the energy index’s 3.8 percent rise leading the advancers as oil prices soared more than 9 percent in one of the biggest one-day rallies in years.
Giving the biggest boost to the S&P and Nasdaq, shares of Apple were up 2.14 percent. The company invited journalists to a Sept 9 event, where it is expected to unveil new iPhones.
Tesla was up 6.8 percent after its Model S P85D received the highest possible score in tests by Consumer Reports magazine.
Advancing issues outnumbered decliners on the NYSE by 2,755 to 349. On the Nasdaq, 2,225 issues rose and 597 fell.
The S&P 500 showed one new 52-week high and one new low, while the Nasdaq recorded 15 new highs and 41 new lows. (Additional reporting by Tanya Agrawal; Editing by Nick Zieminski)