"It's an awful number, but it is a revision and there is a feeling that it just shows something that happened in the past," said Peter Cardillo, chief market economist at Avalon Partners.
The Dow Jones Industrial Average gained 33 points to 13,666, advancing further into record territory.
Of the Dow's 30 component stocks, 16 advanced, led by the likes of United Technologies , Dupont , McDonald's and AT&T Inc. .
The S&P 500 gained 4.2 points to 1,534. On Wednesday, the broad index finished at a record closing high.
The Nasdaq Composite rose 13 points to 2,605.
U.S. stocks rallied on Wednesday after overcoming morning jitters about a sharp Shanghai stock market decline. The Dow industrials managed a 111-point gain and the Nasdaq shot up 20 points.
On Thursday, the market trained its sights on the latest data and deal news.
The Commerce Department said that the weak new 0.6% growth estimate for the first quarter marked the slowest growth since late 2002. Economists surveyed by MarketWatch were expecting GDP to be revised to 0.7%.
The details of the report showed that consumers continued to lead the economy and that the business sector show little spending growth and shrinking inventories.
"Comments from the Fed yesterday noted inventories are now at more respectable levels," said Avalon Partners' Cardillo. "People don't think the GDP number really means that much because the stage is set for a gain in momentum in the second quarter."
Separately, the Labor Department reported that first-time applications for state unemployment benefits stayed elevated above 300,000 in the latest week, but fell back a bit from last week's levels.
There's more data scheduled for 10 a.m. Eastern. The Chicago purchasing managers report is expected to have a May headline reading of 54.0%, according to a median survey of economists polled by MarketWatch. That would be up from 52.9% in April.
April construction spending is expected to show a decline from March level, according to MarketWatch.
Stocks in motion
Shares of A.G. Edwards Inc. gained 14%. The brokerage house was bought by Wachovia for $6.8 billion in cash and stock. The deal will create the second-largest retail brokerage firm in the U.S.
In other acquisition news, Morgan Stanley bought Australia's Investa Property Group for $3.9 billion.
On the earnings front, Costco Wholesale Corp. reported a 5% decline in net profit that was in line with analysts' expectations.
Motorola announced a new rounds of layoffs. This time it is cutting 4,000 jobs in response to slower mobile phone sales.
Yahoo Inc. gained 1%. The online portal was upgraded to overweight from neutral at J.P. Morgan after the company announced the resignation of its chief technology officer, Farzad Nazem.
The Wall Street Journal is reporting that Brocade Communications Systems will pay $7 million to settle allegations by the Securities and Exchange Commission that it issued improper stock options grants. The agreement makes Brocade the first company to pay a fine in the backdating scandal.
Treasurys were unchanged as investors in that market also failed to react to the sharp downward revision in first-quarter GDP. The benchmark 10-year Treasury note last was flat at 97-3/32 with a yield of 4.782%.
The dollar slightly extended its losses against the euro after the weaker revision to quarterly GDP. The euro was last up 0.3% at $1.3465, while the dollar was up 0.05% at 121.56 yen.
Commodities were mixed in the early going. The front-month rude contract fell 23 cents to $63.26 a barrel, as gold futures moved $5.70 higher to $658.80 an ounce.
By Leslie Wines