US STOCKS-Broker upgrades lift Wall St

* Chevron, Procter & Gamble ratings raised

* Palm shares down after weak outlook

* Indexes up: S&P by 0.2 pct, Dow 0.4 pct, Nasdaq 0.1 pct

(Adds Procter & Gamble upgrade, updates prices)

By Chuck Mikolajczak

NEW YORK, Sept 18 (Reuters) - Wall Street rose slightly on Friday after brokerages upgraded stocks across several sectors on bullish outlooks, as investors braced for possible volatility from options expiration.

Procter & Gamble Co jumped 3.2 percent to $57.32 and was the top Dow boost after Citigroup upgraded the stock to "buy," saying the consumer products company is ready to lower prices to win back market share. For details, see [ID:nBNG419626]

"The broker upgrades are coming because the market is going up," said Warren Simpson, managing director at Stephens Capital Management in Little Rock, Arkansas.

"There's not a whole lot of really bad news out there, and there is a bit of good news, and that is teetering the market up a bit."

Chevron Corp gained 1.6 percent to $73.09 after Credit Suisse upgraded shares to "outperform." [ID:nBNG455263]

Homebuilders Toll Brothers Inc and KB Home were both upgraded by J.P. Morgan Securities, which said the housing sector will continue to recover over the next 24 months and drive the current rally in homebuilder stocks. [ID:nBNG182652]

Toll rose 2.6 percent to $22.09, while KB Home gained 1.3 percent to $19.94. The Dow Jones U.S. Home Construction index <.DJUSHB> jumped 1.3 percent.

The Dow Jones industrial average <.DJI> gained 38.32 points, or 0.39 percent, to 9,822.24. The Standard & Poor's 500 Index <.SPX> was up 2.16 points, or 0.20 percent, to 1,067.65. The Nasdaq Composite Index <.IXIC> rose 1.40 points, or 0.07 percent, to 2,128.15.

Genzyme Corp declined 1.1 percent to $57.59 after Deutsche Bank downgraded the stock to "hold." from "buy." [ID:nBNG428660]

The PHLX Semiconductor index <.SOXX> gained 1.3 percent, led by a 3.3 percent rise in SanDisk Corp . Banc of America-Merrill Lynch upgraded the shares to "buy."

Palm Inc fell 3.9 percent to $13.87 a day after the company gave a tepid second-quarter sales forecast. [ID:nN1764442]

Friday marks the quarterly expiration and settlement of four different types of September equity futures and options contracts -- a convergence known as quadruple witching that can lead to greater volume and volatility as traders unwind positions.

(Reporting by Chuck Mikolajczak; editing by Jeffrey Benkoe)