Dow gains on surprise growth report

Stocks slumped Wednesday after Federal Reserve Chairman Bernanke said the U.S. economic outlook has become more uncertain in recent weeks, reviving recession worries.
But such fears were tempered by the final read on fourth-quarter gross domestic product growth Thursday morning. GDP, the broadest measure of the nation's economy, grew at a 2.5 percent annual rate in the quarter, up from the previous estimate of 2.2 percent and a reading of 2 percent in the third quarter.
Another supportive report showed a surprise drop in the number of Americans filing new claims for unemployment last week.
The two strong economic reports initially gave a boost to stocks, with all but 1 of the Dow's 30 components rising. But the advance lost some steam as the morning wore on.
Blue chip gainers included Dow stocks Merck (up $0.50 to $43.73, Charts), Alcoa (up $0.27 to $33.85, Charts), Citigroup (up $0.36 to $51.32, Charts) and JP Morgan (up $0.41 to $48.40, Charts).
In deals news, U.S. Steel (up $3.13 to $100.74, Charts) is buying Lone Star Technologies (up $17.73 to $66.18, Charts) in a deal worth $2.1 billion in cash. Both stocks jumped on the news.
On the downside, a number of technology shares declined, including RF Micro Devices (down $0.73 to $6.34, Charts). The chipmaker warned late Wednesday that first-quarter results will miss forecasts due to weaker demand from a top customer. Shares slumped 10 percent Thursday and topped the Nasdaq's most-actives list.
Market breadth was positive. On the New York Stock Exchange, winners beat losers 2 to 1 on volume of 400 million shares. On the Nasdaq, advancers topped decliners 7 to 6 on volume of 540 million shares.