Cavium touched a record high of $84.41 after larger rival Marvell said it would buy the company for about $6 billion. Cavium shares were last up 10.8 percent at $84.02 and Marvell shares rose 6.4 percent to $21.59.

The S. & P. 500 Index

Position of the S. & P. 500 index at 1-minute intervals on Monday.

The semiconductor index rose 1.2 percent and touched its highest level since the highs of the Y2K bubble.

The Dow Jones Industrial Average rose 72.09 points, or 0.31 percent, to 23,430.33, the S&P 500 gained 3.29 points, or 0.13 percent, to 2,582.14 and the Nasdaq Composite added 7.92 points, or 0.12 percent, to 6,790.71.

Small cap stocks on the Russell 2000 rose 0.7 percent, outperforming the large-cap indexes.

Time Warner Inc shares slid after reports the U.S. Justice Department will sue to prevent AT&T from buying Time Warner.

Time Warner ended down 1.1 percent at $87.71.

Health stocks were weighed by a 2.0-percent drop in Merck to $54.10 and a 0.8 percent fall in Bristol-Myers after Roche announced positive trial results for a competing cancer drug.

Advancing issues outnumbered declining ones on the NYSE by a 1.50-to-1 ratio; on Nasdaq, a 1.54-to-1 ratio favored advancers.

The S&P 500 posted 42 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 129 new highs and 28 new lows.

About 5.67 billion shares changed hands in U.S. exchanges, far below the 6.81 billion daily average over the last 20 sessions and the lightest since Oct. 18.

(Reporting by Rodrigo Campos; Editing by Nick Zieminski)

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