NEW YORK - Stocks plodded higher Thursday as Wall Street reacted warmly to another batch of acquisitions and shrugged off a weak reading of the nation's gross domestic product.
The latest estimate of first-quarter GDP came in at 0.6 percent, the Commerce Department said, lower than the average economist estimate of 0.8 percent and the 1.3 percent projected in April. The GDP number was the worst in more than four years, but investors did not sell off, as it raises the chance of an interest rate cut later this year - a move that could increase spending.
And although Wall Street remains unsure about the economic and interest rate outlook, it continues to be buoyed by the unrelenting surge of takeovers, which are on track to beat last year's record tab of $4 trillion.
On Thursday, banking company Wachovia Corp. said it would acquire A.G. Edwards Inc. for $6.8 billion in cash and stock to form one of the largest retail stock brokerages in the country. And payroll processor Ceridian Corp. said late Wednesday it will be bought out by investment firm Thomas H. Lee Partners LP and insurance provider Fidelity National Financial Inc. for about $5.3 billion.
In the first hour of trading, the Dow Jones industrial average gained 19.02, or 0.14 percent, to 13,652.10, after reaching a new trading high of 13,673.07.
Broader stock indicators also rose.
The Standard & Poor's 500 index advanced 2.92, or 0.19 percent, to 1,533.15, after soaring to a record close on Wednesday for the first time since March 2000.
The technology-dominated Nasdaq composite index added 9.81, or 0.38 percent, at 2,602.40.
Though growth appears to be slower than anticipated, the jobs picture and manufacturing sector look strong. The Labor Department reported Thursday that the number of U.S. workers filing jobless claims dropped last week for the sixth time in seven weeks, and the Chicago Purchasing Managers said its manufacturing index rose to 61.7, higher than expected and up sharply from the April reading of 52.9.
Also, the Commerce Department said construction edged up by 0.1 percent in April, down from a 0.6 percent gain in the previous month but better than economists predicted.
Bonds fell on the strong manufacturing data. The yield on the benchmark 10-year Treasury note rose to 4.92 percent from 4.87 percent late Wednesday.
After Wachovia said it will buy A.G. Edwards, Wachovia slipped 30 cents to $54.25, and A.G. Edwards rose $10.53, or 13.7 percent, to $87.68.
In other corporate news Thursday, discount retailer Costco Wholesale Corp. and jewelry seller Tiffany & Co. released their financial results. Costco posted a fiscal third-quarter profit decline of 4.9 percent, while Tiffany reported a 15 percent rise in fiscal first-quarter profit - indicating that consumer demand for big-ticket items remains robust.
Costco rose 44 cents to $56.97, and Tiffany rose 29 cents to $52.75.
Sears Holdings Corp. reported a solid 20 percent gain in earnings from the recent quarter, but said its U.S. store sales dropped. Sears fell $3.75, or 2.1 percent, to $179.36.
The dollar was mixed against other major currencies, while gold prices rose.
Crude oil futures rose 7 cents to $63.56 a barrel on the New York Mercantile Exchange, after the U.S. government reported an increase in gasoline inventories but a surprising decrease in crude stockpiles. The average U.S. retail gasoline price is $3.191 a gallon, according to AAA, down from the record $3.227 a gallon reached last week.
Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where volume came to 294.1 million shares.
The Russell 2000 index of smaller companies was up 3.11, or 0.37 percent, at 846.44.
Chinese stocks rebounded Thursday after a sharp drop a day earlier. The Shanghai Composite Index rose 1.4 percent.
Japan's Nikkei stock average rose 1.63 percent. In afternoon trading, Britain's FTSE 100 was up 0.55 percent, Germany's DAX index was up 1.56 percent, and France's CAC-40 was up 0.97 percent.
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