Stocks bounded higher Thursday as bullish congressional testimony from Federal Reserve Chairman Alan Greenspan and anticipation for a strong mid-quarter update from Intel brightened Wall Street's mood and overshadowed a surge in oil prices.

Greenspan told lawmakers the economy seems to be on "reasonably firm footing," with inflation under control. His generally positive assessment supports the view that the Fed, which has raised interest rates eight times over the past year, will likely continue nudging rates higher at a gradual pace. Fed policymakers are widely expected to raise the federal funds rate by another quarter percentage point, to 3.25 percent, at their next meeting June 29-30.

The Dow Jones industrial average rose 26.16, or 0.2 percent, to 10,503.02, after spending the first part of the session in negative territory. The Standard & Poor's 500-stock index climbed 6.26, or 0.5 percent, to 1200.93. The Nasdaq composite index gained 16.73, or 0.8 percent, to 2076.91.

The Labor Department reported that the number of people filing new unemployment claims fell by 21,000 last week, the biggest decline in seven weeks.

Movers

Intel advanced 60 cents, or 2.2 percent, to $27.70, after boosting its second-quarter revenue forecast on better-than-expected demand for its notebook computer chips, a sign that the semiconductor industry is gaining strength after a downturn last year.

Computer Associates International rose 1 cent, to $27.01, after the company said it had agreed to acquire Niku, a provider of information technology management and governance software, for $350 million in cash. Niku soared $4.16, or 25.2 percent, to $20.66.

Navistar International gained 85 cents, to $33.06, after the truck and specialty vehicle maker's second-quarter profit rose 2 percent from last year. It also raised its outlook for the full year.

Delta Airlines decreased 7 cents, to $3.85, as concern that higher energy costs will crimp earnings sent a measure of airlines and trucking companies down 1 percent, for the steepest decline among the S&P 500's 24 industry groups. United Parcel Service dropped $1.16, to $71.20.

Indexes

New York Stock Exchange composite index rose 31.56, to 7212.13.

American Stock Exchange index rose 23.47, to 1531.35.

Russell 2000 index of smaller-company stocks rose 5.76, to 626.23.

Volume

NYSE: 1.43 billion shares, up from 1.33 billion on Wednesday. Advancers outnumbered decliners 7 to 5.

Nasdaq: 1.65 billion shares, up from 1.63 billion. Advancers outnumbered decliners 3 to 2.

Commodities

Crude oil for July delivery: $54.28, up $1.74.

Gold for current delivery: $424.20 a troy ounce, down from $424.70 on Wednesday.