Oct. 11 (Bloomberg) -- U.S. semiconductor makers, the stock market's worst performers this year, rebounded in the past month. Earnings reports from companies such as Intel Corp. may help the shares pare more of their losses.

Chip-related companies in the Standard & Poor's 500 Index reached their low for 2004 on Sept. 8, based on the performance of an industry-group index. The measure's 8 percent rise since then is the second biggest among 24 industries in the benchmark, and a further advance in semiconductor shares may help the S&P 500 add to its gain for the year.

Intel, the world's largest producer of computer processors, was one of about 243 technology companies to say since July that earnings would be disappointing.

``There have been enough announcements for us to know there will be a slowdown; that's already calculated into stock prices,'' said Carl Birkelbach, chief executive of Birkelbach Management Corp. in Chicago.

``The stage is set for those negative expectations to turn around and if they change at all, it will cause a move'' higher, said Birkelbach, who oversees $200 million and last month bought shares of Texas Instruments Inc., the biggest maker of chips that run mobile phones.

Bearish bets on chip stocks jumped in September, and he said the increase may point toward a rally. Executives and directors at technology companies boosted stock purchases last quarter, also suggesting the worst may be over.

Semiconductor shares fell last week as the S&P 500 dropped 0.8 percent. The Dow Jones Industrial Average lost 1.4 percent and the Nasdaq Composite Index, which gets 42 percent of its value from computer-related stocks, dropped 1.1 percent last week.

Earnings Calendar

Intel and Novellus Systems Inc., whose equipment builds circuits in computer chips, are among the more than three dozen companies in the S&P 500 scheduled to report quarterly results this week.

With last week's drop, the S&P 500 pared its gain for 2004 to 0.9 percent. The benchmark rose as much as 4.1 percent at its peak in February, and dropped as much as 4.4 percent at its August low.

The chip-stock index fell 30 percent this year, the biggest decline among the 24 industries in the benchmark. Concern that demand for personal computers and mobile phones weakened in the second half fueled the retreat.

``Short interest,'' or the number of shares borrowed and sold to profit from a price decline, rose 10 percent in September to 418.1 million for chip and chip-equipment stocks. The short interest was the highest since July 2003.

Corporate insiders at technology companies bought $86 million worth of their own stock in the third quarter, the highest in two years, according to Thomson Financial.

``Insiders may have a feeling that things aren't that bad and that expectations are so low, that maybe there is the potential to surprise,'' said Birkelbach.

Earnings Reports

Shares of Texas Instruments rose 17 percent in the past month and Broadcom Corp. gained 11 percent, even after the companies lowered their third-quarter sales forecasts. The rally trimmed the loss for Texas Instruments to 25 percent for the year, and 17 percent for Broadcom.

``The news wasn't as bad as expected,'' said Thomas Galvin, who oversees $1 billion as chief investment officer for growth investing at New York-based U.S. Trust. ``There is a sense that inventories are coming closer to being in balance and there might be a fourth-quarter seasonal improvement.'' Galvin said he owns shares of Broadcom, whose semiconductors are used in consumer electronics.

Intel, the worst performing stock in the Dow average in 2004, last month reduced its sales forecast to between $8.3 billion and $8.6 billion. The mid-point of that range, $8.45 billion, would represent a 7.8 percent increase from the year- earlier quarter, the smallest increase in five quarters. The earnings are due after the market closes Oct. 12.

Novellus, which reports results after the close Oct. 13, said in August that third-quarter profit will be at the low end of its previous forecast because some customers delayed orders. The company predicted earnings of 37 cents a share on sales of $412 million. The average analyst forecast from Thomson Financial calls for 38 cents and $412.36 million.

Decline Forecast

Peter Lindner, chief investment officer at ASB Capital Management Inc. in Washington, is among investors who expect more disappointing earnings forecasts from computer-related companies.

``When we talk to Silicon Valley, things are very different than a year ago when their order books were full,'' said Lindner, who oversees $4.5 billion and holds fewer technology stocks than their weighting in the S&P 500. ``There is possibly some more room on the downside for technology.''

Analysts have slashed profit-growth estimates for semiconductor companies, according to Thomson Financial. Earnings for the industry are expected to climb 93 percent in the third quarter, based on the average analyst forecast, and 24 percent in the fourth. That's down from estimates on July 1 for growth of 128 percent and 55 percent.

Even so, semiconductor stocks may rise as some investors unwind their bearish bets, said Som Dasgupta, who oversees $400 million in proprietary trading at PNC Financial Services Group in Philadelphia.

``If you look out at semis in the first quarter of next year, you will see a gain of 10 to 15 percent from here,'' he said.