NEW YORK (CNN/Money) - A tech rally spread to the broader market after a tough start Friday, pushing the Dow industrials to a new high for the year.

Fueled by strength in chip stocks, the Nasdaq composite (up 23.56 to 2,076.66, Charts) overcame weakness in Dell and jumped 1.1 percent, according to early tallies.

The Dow Jones industrial average (up 46.40 to 10,796.01, Charts) hit a new high for the year for the second day running, while the broader Standard & Poor's 500 (up 8.29 to 1,205.30, Charts) index also gained.

For the week, the Dow added 0.7 percent and the S&P 500 gained 0.2 percent, with both indexes rising for the third week in a row.

The Nasdaq composite declined 0.5 percent, after rising for the previous two weeks.

All three major gauges fell in the first 90 minutes of trading, with the Nasdaq off the most after a mixed earnings report and outlook from Dell weighed on techs.

While Dell remained in the red throughout the session, the rest of the tech sector managed to recover nicely, paced by semiconductors.

Treasury prices edged lower, pushing yields higher, while the dollar and oil ended little changed.

A combination of rumors about various geo-political events and some good old-fashioned short covering paced the advance in the morning, said Tim Heekin, head of stock trading at Thomas Weisel Partners. Following that initial spark, the market held onto gains in quiet afternoon trading.

"Even with the Dell news, the two themes we've seen today, and lately, have been strength in select technology -- today, that was the chip sector -- and strength in industrials," Heekin added.

Chips were particularly strong, with the Philadelphia Semiconductor (up 15.06 to 435.52, Charts) index, or the SOX, bouncing 3.6 percent.

Among the movers in the sector, Novellus Systems (up $1.93 to $29.45, Research), a chip gear maker, bounced after Credit Suisse First Boston upgraded it to "outperform" from "neutral," citing improved market shares and better customer leverage in 2005.

Other chip gainers included Intel (up $0.67 to $24.17, Research) and Advanced Micro Devices (up $0.36 to $18.11, Research).

Apple Computer (up $2.85 to $81.21, Research) shares popped after announcing a 2-for-1 stock split of its common shares.

"It (the advance) seems to be very broad-based, with really good breadth," said Tom Schrader, managing director of U.S. equity trading at Legg Mason. "You've got the Dow right now at new highs for the year," and the other indexes not that far off.

The computer maker reported fiscal fourth-quarter earnings per share that topped estimates, and forecast first quarter earnings above estimates. However, the company's fourth-quarter revenue and first-quarter sales guidance were short of expectations.

Following the news, Smith Barney downgraded Dell stock to "hold" from "buy." Dell (down $1.58 to $39.99, Research) shares fell 3.8 percent.

But elsewhere in the market, the mood was more upbeat.

Gains covered a number of sectors, with 23 out of 30 Dow issues rising.

In addition to Intel, Dow gainers included Alcoa (up $0.38 to $29.85, Research), DuPont (up $0.82 to $51.10, Research) and Honeywell (up $0.68 to $39.14, Research).

Among other movers, a number of home builders were weaker after a downgrade from brokerage Smith Barney. Companies mentioned included Beazer Homes (down $3.01 to $162.32, Research), KB Home (down $3.64 to $112.80, Research) and Toll Brothers (down $2.30 to $82.95, Research).

The Dow Jones U.S. home construction (down $21.01 to $865.78, Research) index fell 2.4 percent.

Market breadth was positive. On the New York Stock Exchange, advancers beat decliners by more than 11 to 5 on volume of 1.55 billion shares. On the Nasdaq, winners beat losers nearly 2 to 1 on volume of 2.17 billion shares.

U.S. light crude oil for March delivery rose 6 cents to settle at $47.16 a barrel on the New York Mercantile Exchange.

Treasury prices slipped, pushing the yield on the newly issued 10-year note up to 4.08 percent from 4.05 percent at Thursday's pricing. Treasury prices and yields move in opposite directions.

In currency trading, the dollar inched higher versus the euro and lower versus the yen.

COMEX gold rose $3.30 to trade at $422 an ounce.