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(Updated from 10:23 a.m. EDT)

Stocks were higher this morning, buoyed by a stronger-than-expected report on the U.S. economy's growth.


gross domestic product report, released before the bell this morning, showed the economy grew at 2% in the first quarter, helped in part by the narrowing of the trade deficit. The consensus expectation among economists was for growth of 1.1%. The latest numbers were an improvement from the 1% growth rate registered in the fourth quarter of 2000, but far below the heady 5.6% growth notched in last year's second quarter.


Dow Jones Industrial Average

was up 67.67 points, or 0.6%, to 10,760.92, a bit below earlier levels. The

Nasdaq Composite Index

surged 27 points, or 1.3%, to 2061.80. The

S&P 500

climbed 9.58, or 0.8% to 1244.10. All three indices have pulled back a bit from earlier highs this session.

"The market is reacting positively to what they see as a good stimulus from the Fed," Tony Cecin, the manager of Nasdaq trading at

U.S. Bancorp Piper Jaffray

says. The economy, Cecin says, has reacted quickly to the

Federal Reserve's

four rate cuts, the first of which came Jan. 3.

With today's gains, the Dow has climbed back above the levels reached last week during the massive two-day rally inspired by the

Federal Reserve's

surprise interest rate cut. The Nasdaq, however, is still short of the 2182 level reached April 19, as is the S&P.

"The stock market is looking increasingly like it established the low on April 4," says Steve Slifer, co-chief U.S. economist at

Lehman Brothers

. "As the stock market continues to start climbing here, I think that will boost both consumer and business confidence."

Speaking of confidence, the latest

consumer confidence numbers were revised up to 88.4 from the initial estimate of 87.8 for April. The market was expecting a smaller upward revision to 88.0.

Meanwhile, the market was blowing both hot and cold in response to the latest deluge of earnings reports. The latest bad news came last night from



, which yesterday after the market closed announced more job cuts and

ratcheted down expectations for upcoming financial results. Corning was off about 4.7% in early trading on the Big Board.



, the telecom equipment maker that has its fiber-optic unit on the selling block, is reportedly in talks with


about a complete merger.

The Wall Street Journal

, which reported the talks, said the chances are slim a deal will actually happen, however. Lucent, which has recently been rising from its 52-week low of $5.50, lately rose 1.2% to $10.80.

Japan's electronic behemoth



had good news to report as it posted higher first-quarter operating profits, excluding one-time items. That was its first increase in three years. The company's bottom line was helped by strength in computer and electronic sales. The company also gave an upbeat forecast in anticipation of help from the much-touted PlayStation 2. The stock was up about 1% in early trading.



, the world's largest biotech company, yesterday after the close announced earnings of 28 cents a share, slightly better than analyst expectations of 27 cents a share. But, like so many companies before it, Amgen lowered its earnings growth outlook. It was up 2.6% to $57.34 shortly after the bell this morning and recently gained 5.3% to $58.84.

Chip giant



may continue to move semiconductor stocks today. The company

yesterday reiterated its recent outlook on capital spending and industry growth for the year, saying that, "communications growth will return in the next six to 12 months." 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." Shares of Intel lately gained 3.9% to $29.77.


Philadelphia Stock Exchange Semiconductor Index

, better known as the SOX, was up a solid 4.2% to 637.20, rebounding from its 3.6% skid yesterday. The SOX has gained about 30% since the start of April.

On the analyst front,

Lehman Brothers

this morning cut high-speed communications provider

Level 3 Communications


to market perform from buy, lowering its 12-month target to $15 from $21, after

XO Communications


revised a deal to buy fiber networks from Level 3. Shares of Level 3 fell about 4.5% this morning.


European markets rallied in reaction to the first-quarter GDP figures. London's

FTSE 100

was lately up 72.9 to 5941.2. The Paris

CAC 40

was gaining 97.08 to 5578.8, while the Frankfurt

Xetra Dax

lately gained 39.51 to 6163.2. Some 80% of trading in Frankfurt typically takes place electronically.

The euro was lately trading at $0.8940

Tokyo shares ended mixed amid weakness in high-tech issues that offset gains in other sectors, which were fueled by the anticipation that prime minister Junichiro Koizumi's new cabinet would deliver promised structural reforms. The

Nikkei 225

dipped 38.71 to 13,934.32. In Hong Kong, the Hang Seng jumped 92.9 to 13,386.

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