Oil's fall, techs' gain drive stocks higher

By Caroline Valetkevitch

NEW YORK (Reuters) - Stocks rose in light trading on Thursday, pushing the S&P 500 to its highest close since January, as a pullback in oil prices eased concerns about inflation and a battle to control Yahoo Inc (YHOO.O: Quote, Profile, Research, Stock Buzz) helped the tech sector.

The Nasdaq also had its best close since January 3. Shares of chip maker Intel Corp (INTC.O: Quote, Profile, Research, Stock Buzz) jumped 4.7 percent after Lehman Brothers raised its price target on the stock, citing strength in notebooks and servers.

Crude oil futures fell to below $122 a barrel during the session, but shares of energy companies gained as investment bank UBS sharply raised its projection for oil prices. Shares of Exxon Mobil Corp (XOM.N: Quote, Profile, Research, Stock Buzz) advanced 1.6 percent to $91.30.

News late in the session that key members of the U.S. Senate reached a deal on a housing rescue plan raised hopes for the beleaguered home market.

Financier Carl Icahn started a proxy battle to get control of Yahoo and force it to strike a deal with Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz). Other deal news included CBS Corp's (CBS.N: Quote, Profile, Research, Stock Buzz) plan to buy CNET Networks CNET.O.

"Tech is doing great ... That's very encouraging and the Nasdaq chart is the strongest one out there right now," said Joe Saluzzi, co-manager of trading at Themis Trading, in Chatham, New Jersey.

The Dow Jones industrial average .DJI shot up 94.28 points, or 0.73 percent, to end at 12,992.66. The Standard & Poor's 500 Index .SPX rose 14.91 points, or 1.06 percent, to 1,423.57. The Nasdaq Composite Index .IXIC climbed 37.03 points, or 1.48 percent, to close at 2,533.73.

Trading volume continued to be very light on the New York Stock Exchange, with about 1.20 billion shares changing hands, well below last year's estimated daily average of roughly 1.90 billion. On Monday, NYSE volume hit its low for the year at 1.05 billion.