Stocks turn higher with Fed on tap

NEW YORK (CNNMoney.com) -- Stocks turned higher Thursday as investors brushed aside a lackluster reading on the economy and turned their attention to the impending Federal Reserve interest rate statement, due this afternoon.

The 30-share Dow Jones industrial average (up 15.52 to 13,443.25, Charts) rose slightly, while the broader S&P 500 (up 3.85 to 1,510.19, Charts) added about 0.2 percent with about two hours left in the session. The tech-heavy Nasdaq (up 9.27 to 2,614.62, Charts) gained about 0.3 percent.

"It's all about the Fed, and the market isn't going to act until we get that statement," Warren West, president of Philadelphia-based Greentree Brokerage Services, said earlier in the session, when the indexes were flat.

Before the opening bell, the Commerce Department released its final revision of first-quarter economic growth, which showed the nation's economy grew at a slightly faster pace in the first quarter than previous estimates. But the reading missed forecasts and also included slightly higher inflation pressures.

The gross domestic product, the broadest measure of the nation's economic activity, grew at an annual rate of 0.7 percent in the first three months of the year.

The reading was the weakest in more than four years as businesses sold off inventories but consumer spending remained strong.

Economists surveyed by Briefing.com expected GDP to be revised up to 0.8 percent from the previous 0.6 percent gain.

Economic growth and inflation will be key issues later in the day as investors await the close of the Fed's two-day policy meeting and the accompanying statement on interest rates.

Central bank policymakers are widely expected to keep the target for a key short-term interest rate unchanged at 5.25 percent, but as always, investors will have their eyes glued on the policy statement due at 2:15 p.m. ET.

West said he expects both rates and the statement to remain unchanged, but said if the statement does change he would expect it to hint at further rate increases.

In corporate news, troubled U.S. automaker General Motors announced a deal Thursday to sell subsidiary Allison Transmission to private-equity firms The Carlyle Group and Canada-based Onex Corporation for $5.57 billion. GM (up $0.91 to $38.32, Charts, Fortune 500) shares jumped nearly 3 percent.

Builder KB Home (down $0.22 to $40.21, Charts, Fortune 500) reported an unexpected quarterly net loss of $1.93 a share as revenue tumbled due to the weak housing market. KB shares lost about 1 percent.

And Capital One Financial (up $1.46 to $80.26, Charts, Fortune 500), the credit card issuer and banking company, said it expects to eliminate about 2,000 jobs, or 6 percent of its workforce, as it struggles with mortgage banking losses and higher credit costs. Its shares rose over 1 percent.

Bonds were steady ahead of the Fed policy statement, with yields on the 10-year note at 5.08 percent, unchanged from late Wednesday.

Oil prices were higher in early trading. U.S. light crude gained 88 cents to $69.85 a barrel on the New York Mercantile Exchange.

In global trade, European shares and markets in Asia finished higher.

The dollar was little changed against the euro and slightly higher versus the yen.

Market breadth was positive. On the New York Stock Exchange, winners beat losers 2 to 1 on volume of 715 million shares. On the Nasdaq, advancers topped decliners by a narrow margin as 1.1 billion shares changed hands.