The Nasdaq rose overnight after an improved outlook from Texas Instruments lifted technology stocks, but news that 10 big banks will repay TARP funds failed to stir investor enthusiasm.

Shares of Texas Instruments Inc jumped 6.3 per cent to $US21.02 after the company raised its quarterly earnings and revenue targets, signaling improving demand in the chip market.

The PHLX semiconductor index climbed 4.5 per cent.

"The guidance from Texas Instruments basically follows along with what Intel said mid-quarter that basically that there is a bottom forming and some first starts of improvement in the chip cycle," said Fred Dickson, market strategist and director of retail research at DA Davidson & Co in Lake Oswego, Oregon.

"That implies orders for tech equipment are starting to show early signs of picking up."

Despite the mixed result in the US, Australian stocks are likely to start the  day in the green, with the SPI futures index up 23 points this morning at 3967. The dollar has made its way back over the 80-US-cent mark and was this morning buying 80.15 US cents from last night's notional close of 79.31.

And miners could today get a boost from improved commodities prices offshore overnight. The Reuters Jefferies index rose 1.74 per cent and was this morning at 260.38 points.

US stocks initially moved higher after the Treasury Department said 10 big banks will pay back $US68 billion received under the Troubled Asset Relief Program, or TARP, to the government. But the market quickly fell back on concerns that the money could be put to better use by making loans to businesses and consumers, which would boost the economy.

"These banks want to pay back the TARP money almost immediately. What does that do to their balance sheet and their loaning capability?" said Carl Birkelbach, chairman and chief executive of Birkelbach Investment Securities in Chicago.

"If they were more concerned about the public, they would keep the cash and start loaning out money."

The Dow Jones industrial average dropped 1.43 points, or 0.02 per cent, to 8763.06. The Standard & Poor's 500 Index gained 3.29 points, or 0.35 per cent, to 942.43. The Nasdaq Composite Index climbed 17.73 points, or 0.96 per cent, to 1860.13.

Energy stocks also moved higher as US crude oil futures ended above $US70 a barrel for the first time in seven months, on a weaker dollar and a government forecast of higher demand in 2009.

The PHLX Oil Service Sector index rose 2.2 per cent.

An auction of three-year Treasury notes in the early afternoon was met with solid demand, easing concerns that an oversupply of government debt could push interest rates still higher and increase the cost of borrowing to consumers and businesses.

However, those worries may resurface with the auction of 10-year notes and 30-year bonds later in the week.

General Electric Co, which makes engines for planes, said it expects orders this year to fall by 50 per cent, knocking down shares of plane maker Boeing and United Technologies Corp, also a maker of plane engines.

Boeing shares fell 0.9 per cent to $US52.35, while United Technologies shares slid 1.7 per cent to $US55.52 and were among the top drags on the Dow.

In contrast, shares of conglomerate GE, a Dow component, inched up just 1 penny, or 0.07 per cent, to $US13.57.

The S&P 500 has rallied 39.3 per cent since hitting a 12-year closing low on March 9, leading analysts to speculate a correction was ahead, although recent dips have been brief.

Trading volume was low on the New York Stock Exchange, with about 1.06 billion shares changing hands, below last year's estimated daily average of 1.49 billion, while on Nasdaq, about 2.16 billion shares traded, below last year's daily average of 2.28 billion.

Advancing stocks outnumbered declining ones on the NYSE by 1812 to 1191 while on the Nasdaq, advancers beat decliners by 1590 to 1052.

Reuters