Stock rebound in the works

NEW YORK (CNNMoney.com) -- Wall Street was set for a higher start Thursday, as a stronger than expected reading on U.S. economic growth, coupled with reduced inflationary pressures, reduced investors' worries.

Nasdaq and S&P futures, which had been up in early trading, climbed even higher after the government's final reading for fourth quarter gross domestic product put the broad measure of the nation's economic activity at a 2.5 percent annual growth pace, up from 2.2 percent in the previous estimate. Economists surveyed by Briefing.com had forecast the reading would stay at 2.2 percent.

In addition, one of the more closely watched inflation measures for the Federal Reserve and economists, the report's so-called core PCE deflator, which measures prices paid by consumers for items other than food and energy, fell to an annual increase of 1.8 percent from its previous reading of 1.9 pecent. That keeps it within the 1 to 2 percent range generally seen as the Fed's comfort zone.

"It's a good report," said Peter Cardillo, chief market economist of Avalon Partners. "It certainly reduces recent fears of an economic slowdown. Yes, it basically unravels the perception of a (Fed) rate cut any time soon. But it also suggests we don't have to worry about a rate increase. I think we'll probably see the Fed stay on hold for the balance of the year."

Testimony by Fed Chairman Ben Bernanke about inflation risks and concerns about the pace of economic growth and business spending helped send U.S. stocks lower Wednesday, along with bond prices..

Treasury prices were slightly lower, although they didn't move following the GDP report. The yield on the 10-year note inched up to 4.62 percent from 4.61 percent late Wednesday.

Oil prices turned higher in early trading after Wednesday's run-up on concerns about increasing tensions with Iran. U.S. light crude rose 29 cents to $64.37 a barrel in electronic trading after being lower through much of the overnight period.

Stocks in Asia closed broadly higher, although Japan's Nikkei posted only a narrow gain. Stocks in Europe also climbed in early trading. The dollar was lower against the euro but it gained against the yen.

In corporate news, U.S. Steel (Charts) announced it is buying Lone Star Technologies (Charts), a leading maker of welded oilfield pipes and tubes, in a $2.1 billion cash deal that pays a 39 percent premium for Lone Star shares.

Regulators on Wednesday recommended $210 million in fines against electric utility TXU (Charts), alleging the company manipulated the electric market to its own benefit in the summer of 2005.

Retailer TJX (Charts), which operates the T.J. Maxx and Marshall's chains, announced late Wednesday that at least 45.7 million credit and debit cards numbers were stolen over an 18-month period when computer hackers accessed customers' financial data from its computers. The company also announced plans to repurchase at least $900 million of its own stock.

General Motors (Charts) which significantly trimmed losses on its core automotive operations in 2006, will not pay cash bonuses to top executives for the second consecutive year, according to a report in the New York Times. The company has yet to file its proxy statement which details pay for its top executives.

Intel (Charts) announced early Thursday that it is developing a new generation of chips that will achieve a significant increase in performance without consuming more power, the most significant redesign in its core product since the Pentium Pro in 1996. Intel shares slipped 0.7 percent in early trading in Frankfurt.

Citigroup (Charts) announced it has been hired to advise British bank Barclays (Charts) over its attempt to acquire Dutch rival ABN Amro (Charts). There had been some earlier speculation that Citigroup would launch a competing bid for ABN. Citigroup also said it plans to roughly double its China branch network this year

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