Stocks higher after positive economic forecast

Major stock indicators edged slightly higher Thursday as a private research group said its forecast of economic activity rose for a fourth straight month in July, but at slower pace than in the past three months.

The Conference Board's index of leading economic indicators, which is meant to project economic activity in the next three to six months, rose 0.6% last month. That was slightly less than economists expected and down from a 0.8% rise in June and a 1.2% increase in May.

The Conference Board said the indicators suggest the recession has bottomed out, and that growth in economic activity will begin soon.

Meanwhile, the Labor Department issued some disappointing news on the jobs market. The government said new claims for unemployment benefits rose unexpectedly to 576,000 last week. Economists had predicted a decline.

U.S. stocks did get some support from a rebound in overseas markets. In China, the Shanghai market bounced back from a sharp sell-off and the major European indexes were all up more than 1%.

And Treasury prices dipped after several days of gains — a sign that investors were feeling a bit more optimistic about the economy's prospects. Demand for government debt, considered a safe-haven asset, tends to rise when investors are nervous about the economy.

Stocks have been trading erratically this week as investors, absorbing mixed economic signals, have alternated between optimism and pessimism about a recovery.

Overseas, Chinese stocks erased the previous day's big sell-off with their biggest rally since March. Shanghai's main index rose 4.5%. Japan's Nikkei stock average rose 1.8%. In afternoon trading in Europe, Britain's FTSE 100 rose 1.1%, Germany's DAX index rose 1.2%, and France's CAC-40 gained 1.2%.

Bond prices mostly fell as investors seemed a little more secure about buying stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.47% from 3.46% late Wednesday.

Investors also were poring over more earnings reports from retailers and other companies that directly serve the consumer. The news from Sears Holdings wasn't good; the retailer posted a bigger loss than expected in the second quarter as its sales fell and it closed stores.

Other companies, though, beat Wall Street's expectations. H.J. Heinz said its fiscal first-quarter profit fell due to in part to the stronger dollar, but results topped analysts' estimates. And Hormel Foods said its third-quarter profit rose 49%, exceeding analyst projections.