(Updated from 3:28 p.m. ET)

A late surge carried the blue chips and over-the-counter issues higher by the end of today's regular trading, sending investors home happy for the weekend.

Stocks traded higher throughout the session after this morning's

Gross Domestic Product report showed the economy grew more strongly than expected in the first quarter. The

Dow Jones Industrial Average, which gained almost 118 points, moved in to positive territory for the year, up 0.2%. The

Nasdaq Composite Index finished ahead by 41 today.

The economy grew 2% in the first quarter, helped by the unexpected narrowing of the trade deficit, the GDP report showed. The consensus among economists had been for growth of just 1.1%. The latest numbers were an improvement from the 1% growth rate registered in the fourth quarter of 2000, but still far below the heady 5.6% growth rate notched in last year's second quarter.

As can happen on Friday afternoons, investors were taking some cash off the table. The major stock market indices were off their session highs. "The market is reacting well to a strong GDP number today," said Sam Ginzburg, a trader at

Gruntal

. "But as the session wears on, they're lightening up a bit on their positions." At lunchtime on Wall Street, trading volume was low on both the

New York Stock Exchange and the Nasdaq.

Traders said earlier in the session that they were comfortable with the market's performance since the

Federal Reserve cut interest rates between official meetings last week -- its fourth rate cut for the year. Stocks skyrocketed after the surprise rate cut and then slipped for a few days. Investors were back in the buying mood today. "We've held some important support levels, 2000 on the Comp and 600 on the

Philadelphia Stock Exchange Semiconductor Index

," Ginzburg said.

"After four days of declines in technology, tech stocks are leading the market higher today," said Jon Brorson, director of equities for

Northern Trust.

"The belief is that a strong economy will spill over into technology." For today, Brorson said he was playing along with that notion. But he added that strength in technology is still likely to be questioned, because unemployment is rising, consumer spending is falling and stock valuations are still too high.

Still, only the Dow is back above the levels it reached last week during a massive two-day rally inspired by the Fed's second surprise interest-rate cut this year. But after profit-taking and some bad earnings news hit stocks, the Nasdaq is still short of the 2182 level reached April 19 and the

S&P 500 is below the 1253 mark, which it hit that day.

True to the climate of this earnings season, the market was blowing both hot and cold in response to the latest earnings reports. On the bad news front,

Corning

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announced more job cuts and

ratcheted down expectations for upcoming financial results. Corning closed unchanged at $21.

Lucent

(LU)

, the telecom-equipment maker that has its fiber-optic unit on the selling block, had been on the rise because a report it may be in preliminary talks with

Alcatel

(ALA)

about a complete merger.

The Wall Street Journal

, which reported the rumor, said the chances are slim a deal will actually happen, however. Lucent closed up 1.1% to $10.80, and Alcatel was up 3.7% to $30.96. Usually, an acquisition target will rise and its potential acquirer will drop on news of a merger, as Lucent and Alcatel shares did this morning.

Chip giant

Intel

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, isn't just helping the Dow. It's been giving a boost to semiconductor stocks a day after it reiterated its recent outlook on capital spending and industry growth for the year. "Communications growth will return in the next six to 12 months," the company said. But the downbeat tune remains; analysts looking for a second-half turnaround in the communications sector could be disappointed as supply and demand are still out of whack, and getting worse, Intel executives said. This morning,

Merrill Lynch

analyst Joe Osha reiterated his neutral rating on Intel, but added that, "with no significant change in the state of the business, our opinion remains cautious on the stock."

Intel gained 5.5% to $30.18.

Indeed, semis have so far been on a turbulent ride, as analysts wax both

good and bad about the sector. The

Philadelphia Stock Exchange Semiconductor Index

finished up 5.1%. The SOX, as the index is known, has gained about 30% since the beginning of April.

On a generally up day, retail, financial and transportation stocks were among the winners.

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