Stocks rose with late-session buying of blue chips breaking the day's narrow trading range after investors were reassured by comments on inflation from America's top central banker.
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But amid the lightest trading day of the year, gains in the broader market were held down by persistent concerns about corporate profits.
The Dow Jones industrial average rose 71.57 points, or 0.65 percent, to 11,061.98, according to the latest data, while the Nasdaq composite index added 6.53 points, or 0.30 percent, to 2,155.97. The benchmark Standard & Poor's 500 index was up 6.45 points, or 0.51 percent, to 1,267.12.
"It's very quiet out there today," said Lisa Lynch, head trader at New York-based Orbitex Management Inc. which manages $1 billion. "Earlier there were Greenspan comments about the taming of inflation and that's why we were up (more strongly) this morning, but some investors are holding back before analyst meetings."
Earlier in the day, Federal Reserve Chairman Alan Greenspan bolstered investors' optimism after he told delegates at the International Monetary Conference in Singapore that he did not see inflationary pressures in the United States.
In addition, investors worried about what companies will say during analyst meetings worried some investors, traders said. Top online retailer Amazon.com Inc. is expected to present to analysts on Tuesday, while leading chipmaker Intel will address analysts on Thursday.
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Cypress shares were slightly higher, despite an announcement that its earnings and revenues would be lower than expected amid stalled hopes for recovery in the battered computer chip sector. The gain of 61 cents to $22.21 indicated the company's warning had largely been expected, traders said.
A report showing sales of semiconductors were battered this year by weakening demand for electronics buffeted the sector. The Philadelphia Stock Exchange's Semiconductor index slipped 0.98 percent after the Semiconductor Industry Association said worldwide sales dropped 4.7 percent in April from the month before.
Shares of Cisco Systems , the world's biggest Internet gear maker, gained 75 cents to $19.60 after sources close to Cisco said the company was not in talks to buy U.K. telecommunications equipment maker Marconi Plc .
Modest support came Monday from oil-related stocks, which got a boost from buoyant crude oil futures. NYMEX crude oil futures rose as Iraq halted exports in a dispute with the United Nations and top-oil producing nations sent mixed signals about whether they would be willing to fill the output gap.
The American Stock Exchange's Oil Index climbed 1.48 percent. Oil services giant Exxon Mobil rose $1.32 to $90.27, underpinning the blue-chip Dow average.
Oil refiner Valero Energy Corp. rallied $2.46 to $47.19 after it said it expects second-quarter earnings to exceed its previous expectations because of strong profit margins for its products.
News of acquisitions bolstered stocks of companies that said they would be bought for more than their current share price.
Audio and video retail chain Tweeter Home Entertainment Group Inc. said Monday it agreed to buy Sound Advice Inc. in a move that would increase its store count and position it as the No. 1 U.S. specialty retailer. Tweeter shares fell $3.03 to $25.72, while Sound jumped $8.44 to $23.44.
In other corporate news, Pitney Bowes Inc., the office equipment maker best known for its postage meters , and Hewlett-Packard Co. said Hewlett, the world's top maker of desktop computer printers, agreed to pay $400 million to Pitney Bowes to settle a 1995 patent suit. H-P gained 41 cents to $29.66, and Pitney rose 48 cents to $40.10.
On Friday, stocks rose as a late-session rally on a surprising drop in the nation's jobless rate and a calming outlook by General Motors overtook early selling on continued weakness in the manufacturing sector.
The Dow Jones industrial average climbed 78.47 points, or 0.72 percent, to end at 10,990.41, while the Nasdaq composite index gained 38.95 points, or 1.85 percent, to 2,149.44. The benchmark Standard & Poor's 500 index rose 4.85 points, or 0.39 percent, to 1,260.67.
The Associated Press and Reuters contributed to this report