Leading economic indicators flat after months of decline

NEW YORK -- A yardstick of U.S. economic activity was unchanged in October, halting a decline that began in June and suggesting the nation's poor financial health may be stabilizing.

Separately, the Labor Department said Thursday that weekly jobless claims fell to their lowest level in four months.

The news helped the Dow rise more than 222 points to close at its highest level in three months.

The Dow closed at 8,845.15, up 2.6 percent, after its biggest one-day gain since Oct. 11. The Nasdaq had an even bigger percentage gain, rising 3.4 percent to 1,467.55.

The nation's gradually improving employment outlook helped offset weaker consumer attitudes last month, leaving the Conference Board's Index of Leading Economic Indicators flat at 111.4. It fell a revised 0.4 percent in September.

The index measures where the overall U.S. economy is headed in the next three to six months. It stood at 100 in 1996, its base year.

Since analysts had expected the index to decline 0.1 percent last month, Thursday's report was considered relatively good news.

"It does look like the economy's weakness is starting to ebb a bit," said Douglas Porter, senior economist at BMO Nesbitt Burns Securities in Chicago.

But, he added, "there are still a lot of mixed messages out there."

For example, the housing market remains strong, despite a sharp decline last month, thanks in large part to low interest rates that have also spurred homeowners to refinance loans and free up cash to spend.

However, the manufacturing sector continues to suffer from too much capacity, and auto sales appear to be cooling down after 18 strong months.