NEW YORK, Jul 16: Stocks edged higher early on Thursday as an unexpected drop in new jobless claims and strong earnings from JPMorgan Chase edged out 
 
concerns that a top lender to small businesses could collapse.

The Labor Department said new claims for unemployment insurance plunged last week by 47,000 to 522,000, the lowest level since early January. Economists polled by Thomson Reuters predicted an increase to 575,000.

The improved data, however, may have been affected by the timing of automobile plant shutdowns, analysts said. Eric Thorne, an investment adviser at Bryn Mawr Trust Co. said the figures were ``skewed.''

The market had been surging throughout the week on upbeat earnings reports and forecasts, restarting a rally that stalled last month. The positive reports added to beliefs the economy was in better shape than previously thought. Overseas markets were higher.

But after three days of gains, caution though has returned as small and midsize business lender CIT Group Inc. said negotiations with regulators about a possible rescue broke off after days of talks. That raised expectations that the New York-based financial firm could file for bankruptcy protection.

CIT's fate eased some of the excitement over upbeat earnings reports and outlooks from companies like JPMorgan and chipmaker Intel Corp.

JPMorgan said Thursday it generated record revenue, spurred on by strong investment banking operations. Its results come two days after earnings at another banking giant, Goldman Sachs Group Inc., also topped expectations.

In early morning trading, the Dow Jones industrial average rose 38.02 or 0.4 percent to 8,654.23. The Standard & Poor's 500 index rose 1.47, or 0.2 percent, to 934.15, while tech-heavy Nasdaq composite index rose 6.89, or 0.4 percent, to 1,869.79.

Strong earnings from the banks have encouraged investors about the economy. The results also show that many of the nation's biggest banks have quickly recovered from the collapse of credit markets last fall that led to the failure of Lehman Brothers and near collapse of American International Group Inc.

Nokia Corp., the world's largest cell phone maker, said its second-quarter profit tumbled 66 percent and it scrapped targets to increase market share this year adding to the cautious tone.

Thursday brings more earnings reports that could provide additional signs into how the economy is faring. Internet powerhouse Google Inc. and computer maker International Business Machines Corp. both report earnings after the market closes.