Stocks gained ground on Thursday as encouraging signs of economic growth eased Wall Street's fears of a business slowdown.

The Dow Jones Industrial Average gained 79.80 points, or 0.8 percent, to close at 10,537.60. The Standard & Poor's 500 Index rose 7.61 points, or 0.6 percent, to 1,197.62. The Nasdaq Composite Index moved up 21.12 points, or 1 percent, to 2,071.24.

The Commerce Department reported that U.S. gross domestic product was up 3.5 percent in the first quarter, up from the previously reported annual rate of 3.1 percent. Investors welcomed the report as a sign the economy was still expanding and that inflation risks had lessened.

The news helped minimize the impact of this week's rise in oil prices. A barrel of light crude settled at $51.01, up 3 cents, on the New York Mercantile Exchange.

Among local companies, shares of Calabasas-based homebuilder Ryland Group Inc. gained 5.1 percent to $68.25 after luxury homebuilder Toll Brothers Inc. reported second-quarter profit of $2.01 a share, exceeding the $1.79 average analyst estimate in a Thomson survey, as the industry's sales surged to a record. Shares of Lennar Corp., Beazer Homes USA Inc., Pulte Homes Inc. and Hovnanian Enterprises Inc. also rose on the news.

OSI Systems, Inc. rose 4.6 percent to $15.28 after the Hawthorne-based maker of security and inspection systems said it bought back 157,000 of its common shares in its fourth quarter through May 25 for an average price of $14.25 each. The company also was authorized to purchase an additional 1.3 million shares.

Tekelec edged up 2.3 percent to $13.55 after the Calabasas-based telecommunications products company's stock was raised to "buy" from "hold" by Matrix USA.

And Occidental Petroleum Corp. rose 1.7 percent to $72.69 after the L.A.-based oil company's stock was upgraded to "outperform" from "in-line" by Goldman Sachs.

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