Updated from 4:05 p.m. EDT

After spending the better part of the day in negative territory, stocks used a late surge for the second straight session to finish in positive territory.

The

Dow Jones Industrial Average ended with a gain of 58.20 points, or 0.6%, to 10,216.08. The

Nasdaq rose 24.18 points, or 1.4%, to 1697.63, and the

S&P 500 was up 11.06 points, or 1%, at 1097.08.

Two strong economic reports lifted the major averages moderately higher in the first minutes of trading, but by midmorning the buying interest had subsided, a trend that persisted for most of the day before the late rally.

The Commerce Department said

durable goods orders came in better than expected, bolstered by the strongest demand for automobiles in three years. Orders for durable goods, or items built to last more than three years, rose 1.1% in April, compared with a 0.2% rise in March, blowing away economists' forecasts of a 0.4% increase.

Excluding transportation, the data showed a 2.9% increase. Demand for autos and auto parts led all components with a 12% spike.

Separately, the Labor Department said

initial jobless claims for the week ended May 18 fell to 416,000 from a revised 425,000 the previous week. Economists were expecting the number of first-time claims to come in at 410,000.

On the corporate news front, Internet bellwether

Yahoo!

(YHOO)

said it will shut down its slumping European auction operations within the next six weeks, strengthening

eBay's

(EBAY) - Get Report

already dominant position in the online auction market.

The two companies have inked a multimillion dollar deal under which eBay will be featured on Yahoo!'s Web portal as the preferred site to swap new and used goods. eBay was up 6% to $58.68, and Yahoo! gained 5% to $17.09.

Among the telecom stocks,

Qwest Communications

(Q)

rose 1.4% to $5.10 even after having its debt rating cut to junk status by Standard & Poor's, which said the company might have a difficult time fending off competition in the weak economy.

Another troubled company of late,

Adelphia Communications

(ADLAE)

, said the Rigas family has agreed to relinquish control of the company, giving up its seats on the board of directors and all remaining officer positions. The stock, which was suspended from trading last week, resumed trading this afternoon and fell 54% to $2.62.

Peregrine Systems

(PRGN)

said it would restate earnings for the last three years in response to an ongoing investigation of its accounting practices by the

Securities and Exchange Commission

. Peregrine said the restatement would correct revenue recognition errors totaling $100 million. The stock climbed 4% to $1.59.

Oil services company

Halliburton

(HAL) - Get Report

defended itself against allegations that the company used aggressive accounting procedures to boost revenue back when Vice President Dick Cheney was at the helm. The firm's bookkeeping was called into question because it began recognizing some of its unresolved claims against engineering and construction clients as revenue, even though the dollar amounts were disputed. The stock rose 8% to $19.40.

On the earnings front,

Ciena

(CIEN) - Get Report

, a maker of optical networking equipment, posted a big second-quarter loss, citing a large restructuring charge and the continued slowdown in telecom spending. The company lost $612.2 million loss, or $1.86 a share, compared with a year-ago loss of $50.7 million, or 17 cents a share. Shares of Ciena dropped 6% to $6.08.

In the retail sector,

Tommy Hilfiger

(TOM)

posted a 21% increase in quarterly profits as sales at its European outlets offset stunted growth trends in the U.S. The clothier posted fourth-quarter earnings of $40.7 million, or 45 cents a share, compared with $33.6 million, or 37 cents a share, in the year-ago period. The results topped analysts' expectations by 5 cents. Shares climbed 8% to $15.81.

Krispy Kreme

(KKD)

also exceeded expectations, posting a 50% increase in first-quarter earnings. The doughnut chain said it earned $8.9 million, or 15 cents a share, compared with $5.7 million, or 10 cents a share, a year earlier. Shares of Krispy Kreme, which have had a cult-like following since the company went public, closed up 4% to $41.10.

Elsewhere,

ImClone Systems

(IMCL)

said late Wednesday that CEO Sam Waksal resigned from the troubled biotech company amid accusations that he misled shareholders about the merits of its cancer drug Erbitux. Waksal's brother Harlan, the company's chief operating officer, will take the helm. Shares of ImClone fell 4% to $10.50.

U.S. Treasury issues were lower. Around 4 p.m. EDT, the 10-year note was losing 7/32 at 97 31/32, yielding 5.14%.

Overseas markets were mixed. London's FTSE 100 rose 0.5% to 5175, but Germany's Xetra DAX lost 0.8% to 4880. Japan's Nikkei 225 finished up 0.2% at 11,980, while Hong Kong's Hang Seng closed down 1.5% to 11,625.