NEW YORK -- A closely watched index designed to forecast future business activity fell in March, a sign that the nation's economic growth may be slowing, but a separate report from the Federal Reserve Bank of Philadelphia showed robust manufacturing growth this month in the mid-Atlantic region.
Investors responded enthusiastically to the latter report and strong corporate earnings, with all three major stock indices rising strongly yesterday and the Dow Jones industrial average posting its best one-day showing in more than two years.
The Conference Board reported yesterday that its Composite Index of Leading Economic Indicators fell 0.4 percent last month to 115.1. The decline was slightly larger than that expected by analysts, who had forecast a 0.3 percent drop in the index.
The March drop followed a rise of 0.1 percent in February, and a revised 0.3 percent decline in January.
The March reading points to an economy that, while descending through some turbulence, is making a fairly normal and expected transition to slower growth, economists said.
''This is no more than a slowdown in economic activity, but it's not an indicator that we're about to enter anything more serious than a slowdown," said Anthony Chan, senior economist for J.P. Morgan Asset Management in Columbus, Ohio.
The economic slowing suggested by the index was countered by the Philadelphia Fed's ''beige book" outlook. That report pointed to stronger-than-expected growth in the mid-Atlantic region's manufacturing sector during April, along with rising prices.
On Wall Street, the Dow surged 206.24, or 2.06 percent, to 10,218.60, while the Nasdaq composite index rose 48.65, or 2.54 percent, to 1,962.41. The Standard & Poor's 500 index increased 1.97 percent to 1,159.95.
Also yesterday, the Labor Department reported that the number of Americans filing first-time claims for unemployment benefits plunged by 36,000 last week, the biggest drop in three years.
The drop, which government analysts cautioned was vastly overstated by special factors, pushed the number of applications down to a seasonally adjusted level of 296,000. It marks the third straight week of declining claims.
Analysts said the weekly figures were skewed by the early timing of Easter, and pointed to the four-week moving average of claims as a better indicator. That figure declined by 8,500 to 330,250.
Economists noted that an earlier rise in claims for jobless benefits was the largest factor pushing down the Conference Board's index. Taken together, the economic reports point to a transitional period for the economy, they said.