NEW YORK (CNN/Money) - Technology stocks managed to advance Thursday, buoyed by good news in the semiconductor sector but restrained by very light volume ahead of a three-day weekend.

The Nasdaq Composite Index edged higher 9.26 points, or 0.5 percent, to close at 1,999.87. Only 1.28 billion shares changed hands, down from 1.51 billion shares Wednesday.

The Amex Technology Index added 0.7 percent.

Blue chip tech issues were mostly higher, with No. 1 software maker Microsoft (MSFT: Research, Estimates) up 1.1 percent and Oracle (ORCL: Research, Estimates) up 1.5 percent.

Computer maker Dell (DELL: Research, Estimates) rose 0.7 percent, while Hewlett-Packard (HPQ: Research, Estimates) fell 0.8 percent and IBM (IBM: Research, Estimates) gained 0.4 percent.

Chip manufacturer National Semiconductor announced fourth-quarter profits of $126.4 million, or 32 cents a share, beating analysts' estimates by 3 cents a share amid a broad chip recovery.

National Semiconductor (NSM: Research, Estimates) shares rose 0.9 percent on the news and the positive announcement lifted the sector. Most semiconductor stocks advanced, and the Philadelphia Semiconductor Index gained 0.6 percent.

Bellwether chip company Intel Corp. (INTC: up $0.24 to $28.64, Research, Estimates) rose 0.9 percent and rival Advanced Micro Devices (AMD: Research, Estimates) rose 1.6 percent after announcing Wednesday it made a deal to sell chips to China's top PC maker Lenovo. The China market has previously been dominated by Intel.

Applied Materials (AMAT: Research, Estimates) gained 1.3 percent, but Taiwan Semiconductor (TXM: Research, Estimates), the world's No. 1 microchip contract maker, lost 1.7 percent.

Israeli communications chip maker PowerDsine (PDSN: Research, Estimates) went public Thursday. Its stock rose 4.7 percent.

World's largest Internet service provider America Online said it launched a new service that allows users to conduct audio conference calls and share online presentations over AOL Instant Messenger, its popular instant messaging service.

AOL is a division of Time Warner Inc., the parent company of CNN/Money. Time Warner (TWX: Research, Estimates) shares added 0.6 percent on the news.

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AOL signed deals with WebEx Communications Inc., whose software will let users share video and software applications in real time over the Web. WebEx (WEBX: Research, Estimates) shares dropped 2.5 percent.

Lightbridge Inc. (LTBG: Research, Estimates) will provide telephone conferencing ability to AOL Instant Messenger. Shares jumped 4.4 percent.

SCO Group (SCOX: Research, Estimates) reported a second-quarter net loss of $15 million, or $1.06 cents a share, compared with net income of $4.5 million, or 33 cents a share, a year earlier. Revenue plummeted 53 percent to $10.1 million from $21.4 million a year earlier.

Stock in the controversial company plunged 10.1 percent. SCO has sued IBM and Novell for Linux royalties.

And online market eBay Inc. was voted the most trusted U.S. company in terms of protecting privacy online. eBay (EBAY: Research, Estimates) shares rose 1.3 percent.

Equities markets will be closed Friday to honor former President Ronald Reagan, who died Saturday.  

--from staff and wire reports