North American stocks appear headed for a rebound Thursday morning, buoyed by a solid report on U.S. gross domestic product.

The U.S. Commerce Department today said GDP rose at a 3.5% annual rate January through March in its first revision of economic growth for the quarter. The government a month ago said GDP, a measure of all goods and services produced in the economy, grew 3.1%, slowing from the fourth-quarter’s 3.8% pace. Economists called for a 3.6% increase in first-quarter GDP.

Separately, the U.S. Labor Department said initial jobless claims grew by 1,000 to a seasonally adjusted 323,000 in the week that ended May 21. Wall Street expected a gain of 4,000 claims.

Meanwhile, crude oil futures prices edged above US$51 US a barrel Thursday after an unexpected drop in U.S. crude inventories ahead of the summer driving reason rattled markets. Light sweet crude for July delivery on the New York Mercantile Exchange climbed 16¢ to US$51.14 by midday in Europe.

Here at home, Statistics Canada reported that corporations continued to report record earnings in the first quarter of 2005.

StatsCan said operating profits rose 3.4% to $51.5 billion, following a similar increase in the fourth quarter of last year. Profits have risen in all but two of the last 13 quarters, following a slip in 2001.

In today’s earnings news, TD Bank said its second-quarter profit jumped 22% to $599 million, from a year-earlier $490 million. Earnings for the quarter ended April 30 amounted to 86¢ per share, versus 74¢ a year ago.

Toronto stocks closed slightly lower as declines in bank shares offset gains in energy issues. The S&P/TSX composite index dropped 8.83 points, or 0.09%, to 9,509.52.

The financial sector, which accounts for about a third of the key index, fell 0.73%, second only to a 0.78% drop among information technology shares. Seven of the 10 main TSX groups ended lower.

Second-quarter profits at CIBC and Bank of Montreal both missed analysts’ expectations, triggering the slide in financial stocks.

CIBC shares fell $1.68, or 2.25%, to $73.10, while Bank of Montreal dropped 54¢, or 0.9%, to $55.52.

The junior S&P/TSX Venture composite index edged down1.04 points to finish at 1,605.51.

In New York, stocks fell as oil touched a two-week high and tech stocks faded after a profit warning from Network Appliance Inc., ending the Nasdaq index’s longest rally in five years.

The Dow Jones industrial average dropped 45.88 points, or 0.44%, to close at 10,457.80. The S&P 500 dropped 4.06 points, or 0.34%, to 1,190.01. The tech-heavy Nasdaq Composite Index dropped 11.50 points, or 0.56%, to 2,050.12.