Updates prices to late afternoon

By Sinéad Carew and Ragini Mathur

July 20 (Reuters) - The S&P 500 and Nasdaq rose on Monday as chip stocks recovered some of their prior-week losses and investors looked for moves toward Middle East de-escalation while they waited for earnings reports due from major technology companies later in the week.

Yemen's Iran-aligned Houthis said on Monday that they were imposing a naval blockade on Saudi Arabia , opening a new front in the U.S.-Iran war and widening the threat to global energy supplies and trade beyond the Gulf. But on the same day a senior Iranian official told Reuters that mediators have passed Iran a proposal to de-escalate the war with the U.S. that would offer a 10-day ceasefire to find ways to revive an interim deal reached last month.

After more than a week of bombing in the region, Joe Quinlan, head of CIO market strategy for Merrill and BofA Private Bank, said that investors were anxious for any efforts toward a Middle East resolution that could potentially re-open the Strait of Hormuz and improve oil supplies and prices.

"The hope is if you get some type of resolution — less bombing, more talk in the Middle East — that oil prices and gasoline prices would not go as high as we saw earlier this year and therefore, alleviate some of that pressure on consumer prices," Quinlan said.

While investors appeared to be seeking bargains in the chip sector after last week's sharp selloff, Quinlan added that they may be positioning themselves ahead of earnings.

The second-quarter earnings season will pick up pace this week, with results due from big names like Alphabet GOOGL.O, Tesla TSLA.O, Intel INTC.O and IBM IBM.N.

Markets are expecting S&P 500 earnings growth of 26% for the second quarter year on year, up from an earlier estimate of 23.7%, according to data compiled by LSEG.

In particular, investors will monitor results from chipmakers such as Intel and Texas Instruments TXN.O for any encouraging signs after the Philadelphia SE Semiconductor Index .SOX ended Friday more than 20% below its late-June record high, confirming a bear-market decline. The chip index was up 1.6% on Monday.

On Monday at 2:21 p.m., the Dow Jones Industrial Average .DJI fell 143.74 points, or 0.28%, to 52,002.68, the S&P 500 .SPX gained 17.49 points, or 0.23%, to 7,474.82 and the Nasdaq Composite .IXIC gained 138.54 points, or 0.54%, to 25,658.78.

Among the S&P 500's 11 major industry sectors just three were gaining on Monday, including energy .SPNY and the heavyweight technology .SPLRCT and communications services .SPLRCL sectors.

Alphabet, up 1.7%, was among the strongest boosts after a report that its Google unit is developing a Gemini-integrated server chip aimed at improving AI efficiency and easing computing-capacity constraints.

Among other individual movers, Domino's Pizza DPZ.O was up 2.2% after the pizza chain's quarterly revenue edged past Wall Street estimates.

Declining issues outnumbered advancers by a 1.21-to-1 ratio on the NYSE, where there were 81 new highs and 96 new lows. On the Nasdaq, 2,086 stocks rose and 2,541 fell as declining issues outnumbered advancers by a 1.22-to-1 ratio. The S&P 500 posted 9 new 52-week highs and 6 new lows.