US STOCKS-S&P hovers near resistance but weak volume persists

* Some at Fed saw easy money need past 2011-minutes

* Texas Instruments offers to buy National Semiconductor

* Nasdaq OMX rebalances Nasdaq 100, Microsoft rallies

* Dow dips 0.1 pct, S&P off 0.02 pct, Nasdaq up 0.1 pct

* For up-to-the-minute market news see [STXNEWS/US]
(Updates to close)

By Angela Moon

NEW YORK, April 5 (Reuters) – The S&P 500 failed to break
a key technical resistance level for a second day on Tuesday
as low trading volume raised further questions about the
market’s strength.

The broader market index closed slightly below 1,333, a
closely watched level as it represents a doubling from the low
reached in March 2009.

Trading volume was relatively low with just 6.85 billion
shares traded on the New York Stock Exchange, NYSE Amex and
Nasdaq, compared with last year’s estimated daily average of
8.47 billion.

But a rebalancing of the Nasdaq 100 (.NDX: Quote, Profile, Research), which takes
effect on May 2, spurred traders to buy companies with
increased weightings, including Microsoft Corp (MSFT.O: Quote, Profile, Research), Intel
Corp (INTC.O: Quote, Profile, Research) and Cisco Systems Inc (CSCO.O: Quote, Profile, Research), all of which
rose around 1 percent.

“The (low) volume is a sign that there is little
conviction from sellers in this market,” said Jeff Kleintop,
chief market strategist for LPL Financial in Boston.

The S&P has slowly built gains since mid-March in mostly
quiet sessions. Last week was the thinnest week of trading so
far in 2011 and Monday was the lowest-volume day of the year.

“Those wishing for more volume should be careful what they
wish for since a rebound in trading volume may come with the
return of volatility, rather than the steady gains we have
seen since last summer.”

Minutes of the last Federal Reserve meeting showed some
Fed officials believed the U.S. central bank should tighten
conditions before year-end. Stock market reaction was muted.
For details, see [ID:nN05140054]

Chip stocks were supported after Texas Instruments (TXN.N: Quote, Profile, Research)
late Monday offered to buy National Semiconductor (NSM.N: Quote, Profile, Research) in a
deal worth $6.5 billion, a premium of 78 percent. The PHLX
semiconductor index (.SOX: Quote, Profile, Research) rose 2.3 percent.

The Dow Jones industrial average (.DJI: Quote, Profile, Research) slipped 6.13
points, or 0.05 percent, to end at 12,393.90. The Standard &
Poor’s 500 Index (.SPX: Quote, Profile, Research) inched down just 0.24 of a point, or
0.02 percent, to 1,332.63. The Nasdaq Composite Index (.IXIC: Quote, Profile, Research)
rose 2.00 points, or 0.07 percent, to 2,791.19.

Apple Inc’s (AAPL.O: Quote, Profile, Research) weighting was slashed, though it
remains the biggest component of the Nasdaq 100. The stock was
down 0.7 percent at $338.89 after earlier falling as much as
1.5 percent. [ID:nN05109783]

The announcement of a merger with Texas Instruments drove
National Semi shares up 71 percent to $24.06. Texas
Instruments added 1.7 percent to $34.69. [ID:nLDE7340KR]

“Tech stocks are leading this big wave of merger and
acquisition activity, which people are trying to position
themselves ahead of and which I expect to continue,” said
James Swanson, chief investment strategist at Boston-based MFS
Investment Management, which oversees about $200 billion.

The deal is the latest in a string of multibillion-dollar
deals that have helped pushed stocks higher in recent weeks.

China’s central bank increased interest rates on Tuesday
for the fourth time since October, raising suspicions that
data next week may show higher inflation than expected in
March.

KB Home (KBH.N: Quote, Profile, Research) shares dropped 4.2 percent to $11.69 after
it reported a first-quarter loss that widened from the
previous year, hurt by a fall in net orders. [ID:nL3E7F520B]

Advancing stocks outnumbered declining ones on the NYSE by
1,629 to 1,312, while on the Nasdaq, advancers beat decliners
by 1,328 to 1,270.

(Reporting by Angela Moon; Editing by Jan Paschal)

US STOCKS-S&P hovers near resistance but weak volume persists