US STOCKS-Wall St up on M&A, Nasdaq 100 rebalance but volume low

* 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 up 0.1 pct, S&P up 0.1 pct, Nasdaq up 0.2 pct

* For up-to-the-minute market news see [STXNEWS/US]
(Updates to late afternoon; changes byline)

By Angela Moon

NEW YORK, April 5 (Reuters) – U.S. stocks rose on Tuesday
after a proposed merger of two major semiconductor companies
and an updating of a key Nasdaq index, but light trading
volume suggested the rally may not be sustainable.

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]

Trading volume continued to be light. By late afternoon
trade, just 4.58 billion shares traded on the New York Stock
Exchange, NYSE Amex and Nasdaq.

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

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
more than 1 percent and were the Dow’s top three percentage
gainers.

Apple Inc’s (AAPL.O: Quote, Profile, Research) weighting was slashed, though it
remains the biggest component. The stock was down 0.7 percent
at $338.80 after earlier falling as much as 1.5 percent. For
details, see [ID:nN05109783

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. National Semi shares jumped 71.6
percent to $24.15. Texas Instruments added 1.9 percent to
$34.74. [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.
The Dow closed on Monday at its highest level since June 2008,
though volume was the lowest of the year.

“This is a powerful cycle that is setting the stage for
further gains as we go into earnings season,” Swanson said.

The Dow Jones industrial average (.DJI: Quote, Profile, Research) was up 13.44
points, or 0.11 percent, at 12,413.31. The Standard & Poor’s
500 Index (.SPX: Quote, Profile, Research) was up 1.83 points, or 0.14 percent, at
1,334.70. The Nasdaq Composite Index (.IXIC: Quote, Profile, Research) was up 5.74
points, or 0.21 percent, at 2,794.93.

The S&P 500 rose above 1,333, a closely watched level that
is double the low it reached in the financial crisis. It
hasn’t ended above that level since mid-February, and the
recent light volume has raised questions about the durability
of the rally.

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.

In the latest snapshot of the U.S. economy, the Institute
for Supply Management showed the vast U.S. services sector
grew more slowly in March than it did in February.
[ID:nL3E7F51LX] [ID:nN04250301

KB Home (KBH.N: Quote, Profile, Research) shares dropped 3.9 percent to $11.72 after
it reported a first-quarter loss that widened from the
previous year, hurt by a fall in net orders. [ID:nL3E7F520B]
(Reporting by Angela Moon; Editing by Jan Paschal)

US STOCKS-Wall St up on M&A, Nasdaq 100 rebalance but volume low