NEW YORK (CNN/Money) - Technology rallied Monday, boosting the Nasdaq and dragging the broader market higher as investors tiptoed back into stocks after last week's big selloff.

The Nasdaq composite (up 7.87 to 2,097.04, Charts) added around 0.4 percent and the Standard & Poor's 500 (up 4.06 to 1,190.25, Charts) index added 0.3 percent.

The Dow Jones industrial average (up 17.07 to 10,621.03, Charts) closed with modest gains.

Stocks had started off the new year on a sour note, tumbling in the first week of 2005, as investors cashed out on some of the big winners in the market rally in late 2004.

After stumbling at the open, stocks turned higher Monday, with investors willing to jump back in. Although the major gauges closed well off their highs for the session, the tone remained modestly upbeat.

"We've been through a pretty sharp selloff in the first week of the year, a correction really, and now we're starting to see some stabilization," said Timothy Ghriskey, chief investment officer at Solaris Asset Management.

"Perhaps the market can move higher from here," he added, "although you're going to start getting into earnings soon, and that can have a mixed impact."

After the close Monday, Alcoa (Research) became the first Dow component to report earnings this quarter. The aluminum producer reported earnings of 39 cents per share, 3 cents less than expected and up from 37 cents a year ago.

While the company reported higher revenue on aluminum sales, earnings were down due to costs related to selling certain non-core businesses, as well as higher material costs.

Genentech (Research) also reported earnings late Monday. The biotech said it earned 21 cents per share, a penny short of estimates, but up from 14 cents a year ago. The company also forecast fiscal year 2005 earnings per share growth that is shy of expectations.

On Tuesday, Intel (Research) reports its fourth-quarter results after the bell. The chip leader is expected to have earned 31 cents per share, up from 27 cents a year ago.

In corporate news, News Corp. (down $0.38 to $17.85, Research) said it would buy out the remaining stake of Fox Entertainment Group it doesn't already own, in a deal worth around $6 billion. News Corp. shares inched 3 percent lower, while Fox (up $3.06 to $34.28, Research) shares popped 8 percent on the news.

The two stocks were the New York Stock Exchange's most actively traded issues.

Alltel, a rural telephone company, said it would buy Western Wireless for about $4.4 billion in cash and stock, confirming speculation about a merger. Alltel (down $1.37 to $54.75, Research) shares slid nearly 2.5 percent, while Western Wireless (up $0.85 to $37.37, Research) gained more than 2 percent.

Shares of Hollywood Entertainment (up $0.81 to $13.86, Research) popped more than 6 percent after it agreed to an $850 million buyout from smaller rival Movie Gallery (up $0.95 to $20.02, Research), bad news for larger rival Blockbuster (down $0.17 to $9.12, Research).

Dow component Altria (up $0.80 to $62.20, Research), the parent of Philip Morris, gained 1.3 percent after Morgan Stanley boosted its 12-month price target to $68 from $62. The brokerage cited the potential for higher tobacco profits among other factors.

Among other movers, American Pharmaceutical Partners (up $11.01 to $49.72, Research) surged more than 28 percent in active Nasdaq trade. The biotech said late Friday that U.S. regulators had approved its breast cancer drug Abraxane.

Market breadth was positive. On the New York Stock Exchange, winners beat losers by 5 to 3 on volume of 1.48 billion shares. On the Nasdaq, winners beat losers 8 to 7 on volume of 2.1 billion shares.

Wholesale inventories rose 1.1 percent in November, according to a report released around 30 minutes after the start of trade, after rising 1.1 percent in October. Economists surveyed by Briefing.com thought inventories would rise 0.7 percent in November.

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Oil prices abruptly tumbled after being higher throughout the session. U.S. light crude oil for February delivery fell 10 cents to settle at $45.33 a barrel on the New York Mercantile Exchange.

Treasury prices inched lower, pushing the yield on the 10-year note up to 4.27 percent from 4.26 percent late Friday. Bond prices and yields move in opposite directions.

In currency trading, the dollar fell versus the euro and yen.

COMEX gold rose 30 cents to settle at $419.70 an ounce.