Stocks reversed early losses and gained Wednesday as a drop in crude oil prices and upbeat earnings news helped offset an unexpectedly steep drop in durable goods orders.

The Dow Jones industrial average (search) was up 47.67 points, or 0.47 percent, to end at 10,198.80. The Standard & Poor's 500 Index (search) was up 4.64 points, or 0.40 percent, to close at 1,156.38. The Nasdaq Composite Index (search) was up 2.99 points, or 0.16 percent, to finish at 1,930.43.

Oil plummeted $2.59 to $51.61 on the New York Mercantile Exchange (search) following the government's weekly inventory report, which showed a 5.5 million barrel increase in crude supplies, but a 300,000 barrel draw on gasoline; analysts had been hoping for a build.

The near 5 percent tumble in crude oil prices turned the market around from an early slide. Trading started poorly as data showing a plunge in new orders for durable U.S.-made goods hurt investor sentiment about the economy.

"The decline in the price of crude superseded the negative of the decline in durable goods orders," said Ned Riley, chief executive and chief investment officer of Riley Asset Management.

"I think investors believe that there's life beyond this recession-type scenario -- and that that life involves investing in financials, consumer non-durables and health care, and avoiding cyclical stocks such as steels and oil companies."

The energy stocks in the S&P 500 collectively shed 2.58 percent on the news, according to the ETF that tracks the sector; Exxon Mobil Corp. (XOM) dropped 1.5 percent, or 89 cents, to $58.38, making it Dow's worst performing stock for the day.

Some observers felt the uptick lacked conviction, and predicted a continuation of the volatility that has dogged stocks so far during this earnings season.

"Earnings season is always volatile," said Michael Murphy, head trader at Wachovia Securities in Baltimore, noting that historically, April has been the worst month of the year for stocks. "The bias seems to be to the upside today, and if we continue to get good news the market can move higher. But I still think it's likely to remain volatile through the end of the week."

The falling price of oil cheered investors, who had been deeply worried by the Commerce Department's (search) report that orders to U.S. factories for durable goods — big-ticket items that last three years or more — had plunged 2.8 percent in March. Some drop was expected after three months of declines, but the reading was far weaker than economists expected. It renewed concerns that the economy may be entering another "soft patch" as consumers and businesses, jolted by hefty fuel prices, cut back spending.

Analysts were less alarmed by the data, however, saying it reduced the likelihood that the Federal Reserve (search) would take a more aggressive approach to raising short-term interest rates when the policy makers meet next week. Fears of a more aggressive Fed were raised Tuesday by a report that showed a surprise jump in new home sales for March.

"Some of the numbers and evidence suggest the cyclical expansion is not as strong as people believe, but it is still resolutely good," said Subodh Kumar, chief investment strategist for CIBC World Markets. "I think that what is happening is the markets are readjusting to more moderate growth."

Reflecting the market's comfort on the interest rate issue, financial stocks were among the day's best gainers. Insurer American International Group (AIG) added 78 cents to $51.85, and Citigroup (C) gained 43 cents to $47.05.

The top performer on the Dow was Verizon Communications Inc.(VZ) , which gained 3.59 percent, or $1.22, to $35.22, after topping Wall Street forecasts with a first-quarter profit of $1.76 billion on a 6.6 percent rise in revenues, thanks to its rapidly growing wireless business.

Boeing Co. (BA) rose 66 cents to $59.66 after reporting a 14 percent drop in its first-quarter profits as higher spending on deferred compensation and pension expenses offset gains in its military contracting and airplane manufacturing businesses. Still, the Chicago-based aerospace company earned 64 cents per share, excluding charges; analysts surveyed by Thomson Financial had forecast 55 cents per share.

Amazon.com Inc. (AMZN) slid 99 cents to $31.72 after sales rose strongly, but net income sagged 30 percent on tax expenses and a new fee-based membership program that expands the online retailer's foray into free shipping. Amazon, one of the world's largest e-commerce companies, earned 18 cents per share, in line with expectations.

Materials were also under pressure; copper producer Phelps Dodge Corp. (PD) lost 4.2 percent, or $3.70, to $85.54, even after soundly beating Wall Street expectations by doubling its first-quarter earnings, year-over-year, thanks to strong commodity pricing. Dow Chemical Co. (DOW) shed 1.5 percent, or 70 cents, to close at $44.77.

Trading was active, with 1.69 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 1.81 billion shares were traded on Nasdaq, matching last year's daily average.

Advancers outnumbered decliners on the New York Stock Exchange by 6 to 5 while decliners outnumbered advancers by about 8 to 7 on Nasdaq.

The Russell 2000 index, which tracks smaller company stocks, was down 0.52, or 0.09 percent, at 587.14.

Overseas, Japan's Nikkei stock average slid 0.28 percent. In Europe, France's CAC-40 sank 1.64 percent, Britain's FTSE 100 fell 1.16 percent and Germany's DAX index was down 1.06 percent.

Reuters and the Associated Press contributed to this report.