The Dow industrials rose on Monday on Caterpillar's strong results, while weak bank shares left the broad S&P 500 index little changed.
Positive corporate earnings and a flurry of deals also pushed some stocks sharply higher.
Caterpillar Inc , the heavy machinery maker, raised its full-year profit forecast and said economic conditions are definitely improving. The stock gained 4.6 percent to $71.93 and gave the biggest boost to the Dow industrials.
Bank shares fell, with Citigroup Inc down 4.1 percent at $4.66 after the U.S. Treasury said it would begin selling part of the 27 percent stake it holds in the bank after $45 billion in taxpayer-funded bailouts.
A proposal to overhaul financial regulation was expected to face a crucial Senate test vote on Monday and weighed on financial shares. The KBW bank index <.BKX> fell 1.7 percent.
Most of the big banks' profits come from trading and if you restrict their trading profits, that's going to restrict their overall profits, said Keith Springer, president of Capital Financial Advisory Services in Sacramento, California, about possible outcomes of the regulation reform.
The regional banks will be hurt the most because they can't make up the cost of the fees the financial reform is going to charge them.
The Dow Jones industrial average <.DJI> gained 24.86 points, or 0.22 percent, to 11,229.14. But the Standard & Poor's 500 Index <.SPX> shed 1.65 points, or 0.14 percent, to 1,215.63. The Nasdaq Composite Index <.IXIC> dipped 2.98 points, or 0.12 percent, to 2,527.17.
On the New York Stock Exchange, nearly six shares rose for every five that fell, while on the Nasdaq, advancers beat decliners by a ratio of about five to four.
Whirlpool Corp surged nearly 16 percent to an all-time high at $118.44, lifting the S&P consumer discretionary sector <.GSPD>. Whirlpool, the world's largest appliance maker, reported earnings that beat estimates and raised its full-year profit view.
A handful of deals also caught investors' attention. Hertz Global Holdings Inc said it agreed to buy Dollar Thrifty Automotive Group Inc for about $1.2 billion, while Charles River Laboratories International , the U.S. clinical research company, said it plans to acquire WuXi PharmaTech Inc for $1.6 billion.
Dollar Thrifty's stock gained 9.6 percent to $42.56, while shares of acquirer Hertz jumped 15.4 percent to $14.86.
In the pharmaceutical research realm, the U.S.-listed shares of WuXi surged 17.4 percent to $19.45, while the stock of acquirer Charles River Laboratories slid 13.9 percent to $34.23.
In the financial services sector, a stock transaction was in the news. Stifel Financial Corp will acquire rival Thomas Weisel Partners Group Inc for about $300 million in stock, the companies announced.
Stifel Financial's stock slipped 4.1 percent to $53.44 on the New York Stock Exchange, while Thomas Weisel shares soared 65.6 percent to $7.22 on Nasdaq.
Worries over Greece's ability to finance itself weighed on equity and other markets. Germany set tough terms to secure emergency aid for Athens, increasing uncertainty over a financial rescue that pushed the cost of insuring against a Greek debt default to a record high.
A Bank of New York Mellon index of U.S.-traded shares of Greek companies <.BKGR> fell 1.4 percent.
(Reporting by Rodrigo Campos; Editing by Jan Paschal)