Stocks on the rise

NEW YORK (CNNMoney.com) -- Stocks surged anew Thursday morning, as investors welcomed the latest round of deal-making and took a sanguine approach to a weaker-than-expected reading on first-quarter gross domestic product growth.

The Dow Jones industrial average (up 28.45 to 13,661.53, Charts) gained 0.2 percent and touched a new record intraday high of 13,672.82, before pulling back a bit. The Dow ended the previous session at a fresh all-time high.

The broader S&P 500 index (up 3.80 to 1,534.03, Charts) added 0.3 percent, after ending the previous session at an all-time high, taking out its previous record from March 2000. That level would prove to be the top of the bull market sparked by the late 1990s tech rally.

The Nasdaq composite (up 12.10 to 2,604.69, Charts) gained 0.5 percent, after ending the previous session at a 6-year high.

GDP showed an annual growth rate of 0.6 percent in the first quarter, the government said Thursday morning, down from an initial read of 1.3 percent growth. Analysts expected growth of 0.8 percent. Growth in the quarter was the slowest since 2002.

A separate report released after the start of trade was more promising. The Chicago PMI, a measure of manufacturing in the Midwest region, rose to 61.7 in May from 2.9 in the prior month. Economists thought it would rise to 54.0 on average.

The two reports seemed to support bets that the economy is slowing enough that the Federal Reserve might be able to start lowering rates later this year - but isn't slowing so much as to suggest a recession is brewing.

Stocks rallied Wednesday, with the Dow and S&P 500 ending at all-time highs as investors focused on the positive parts of the minutes from the last Fed policy meeting, including the banker's observation that risks to the economy are waning.

The minutes helped cool some worries sparked by a selloff in global markets, following a pummeling in Chinese stocks after the government tripled the tax on share trades in a bid to slow the surging stock market.

Also helping stocks Thursday: the latest M&A news.

Wachovia (down $0.25 to $54.30, Charts, Fortune 500) is buying A.G. Edwards (up $10.73 to $87.88, Charts) for $6.8 billion in cash and stock, in a move that will create the second-largest U.S. retail brokerage.

Also in the finance space, Morgan Stanley (up $0.59 to $86.41, Charts, Fortune 500)'s real estate unit is buying Australia's Investa Property Group for $3.9 billion in cash.

U.S. light crude oil for July delivery fell 31 cents to $63.18 a barrel on the New York Mercantile Exchange ahead of the weekly oil inventories report.

Treasury prices slipped, raising the yield on the 10-year note to 4.90 percent from 4.87 percent late Wednesday. Bond prices and yields move in opposite directions.

In currency trading, the dollar gained modestly versus the euro and the yen.