updated 9/14/2004 9:44:04 AM ET 2004-09-14T13:44:04

Optimism that the embattled technology sector was due for a recovery sent stocks modestly higher Monday despite a new revenue warning from semiconductor company Broadcom Inc.

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While Broadcom, which makes chips for television set-top boxes and other electronics, said high inventories resulted in delayed shipments, investors were encouraged as it said future quarters looked brighter.

“Tech acts like that. You couldn’t have said a good thing about tech last week, and now we’re seeing some buying,” said Bryan Piskorowski, market analyst at Wachovia Securities. “Overall, I think the market’s becoming comfortable with the economic slowdown over the summer. I think we see now that it’s not something pervasive or something that’s going to continue.”

Investors were also encouraged by a new report by J.P. Morgan Securities, which said disappointing earnings would not be a factor in the year’s overall results. The brokerage also raised its year-end target on the Standard & Poor’s 500-stock index to 1,200 from 1,150.

At the close, the Dow Jones industrial average was up 1.69 points, or 0.02 percent, at 10,314.76, while the S&P 500 index was up 1.90 points, or 0.2 percent, at 1,125.82. The Nasdaq composite index rose 16.07 points, or 0.9 percent, to 1,910.38.

Investors preferred semiconductor companies and small-cap stocks, while bidding financials and blue-chip stocks lower for the session. Another rise in oil prices due to concerns over Hurricane Ivan’s effect on oil exploration in the Gulf of Mexico did not have a large impact on trading. A barrel of light crude settled at $43.87, up $1.06, on the New York Mercantile Exchange.

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Trading volume was relatively light on Wall Street as many investors awaited better economic data later in the week, including new readings on retail sales and the consumer price index on Tuesday. The Federal Reserve’s Sept. 21 meeting on interest rates, at which the Fed is likely to raise the benchmark rate a quarter percentage point to 1.75 percent, also kept investors on the sidelines.

Broadcom said it now expects revenues for the quarter to come in flat or just slightly higher than a year ago. The company said customers of its set-top box chips have asked for shipping delays due to excess inventory, but added that it still expects growth in future quarters. Broadcom surged $2.60 to $30.30.

“I think people believe that we’re at the lows for tech right now. They want to be optimistic. That’s why you’re seeing techs respond so well, even on the bad news,” said Michael Palazzi, managing director of equity trading at SG Cowen Securities. “And in semiconductors, you always get a nice bounce in late September and October. It just seems to be happening early this year.”

Struggling airline US Airways Group Inc. tumbled 44 cents, or 30 percent, to $1.02 after it filed for bankruptcy protection, a move that was widely expected. The nation’s seventh-largest airline will continue operations as it attempts to sort out its finances.

Time Warner Inc. dropped its bid for Hollywood’s last independent movie studio, Metro-Goldwyn-Mayer Inc., shortly after rival Sony Corp. raised its own bid. MGM was up 44 cents at $11.55, while Sony gained 53 cents to $35.82 and Time Warner slipped 6 cents to $16.45.

Campbell Soup Co. saw fourth-quarter profits fall due to higher promotional costs and lower sales. The soup company missed Wall Street estimates by a penny. Campbell dropped 70 cents to $25.50.

E.W. Scripps Co. lost 22 cents to $51.22 after it reiterated its earnings outlook of 35 cents to 39 cents per share for the current quarter. However, the media company said it was still assessing hurricane damage at newspapers and a television station in Florida, and may be forced to take one-time charges.

Overseas, Japan’s Nikkei average jumped 1.5 percent. In Europe, Britain’s FTSE 100 was up 0.3 percent, France’s CAC-40 gained 1.3 percent and Germany’s DAX index climbed 1.7 percent.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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