China reported record imports of some commodities and stronger-than-expected exports, boosting U.S. companies with large international operations, like construction machinery maker Caterpillar Inc and aluminum producer Alcoa Inc .
There's definitely a China effect on U.S. stocks today, said Peter Boockvar, equity strategist at Miller Tabak & Co in New York.
Alcoa closed 2.5 percent higher at $17.45 before reporting after the market's close a narrower fourth-quarter net loss of $277 million, or 28 cents per share.
Alcoa's revenue fell to $5.43 billion from $5.68 billion but was higher than the average analyst estimate of $4.86 billion, according to Thomson Reuters I/B/E/S.
Alcoa was the first Dow component to announce results, launching the earnings season that will show whether profits and outlooks will be strong enough to sustain stocks' advance.
Caterpillar shares jumped 6.3 percent to $64.13, its largest daily advance since late July.
Large technology shares dragged the Nasdaq lower, with Apple Inc down 0.9 percent to $210.11, and Microsoft Corp down 1.3 percent to $30.27.
International Business Machines Corp fell 1.2 percent to $129.30 and cut gains on the Dow industrials.
A lot of the high-profile technology names that have had extraordinary runs are taking a breather, Boockvar said.
The Dow Jones industrial average <.DJI> gained 45.80 points, or 0.43 percent, to 10,663.99. The Standard & Poor's 500 Index <.SPX> rose 2.00 points, or 0.17 percent, to 1,146.98. The Nasdaq Composite Index <.IXIC> fell 4.76 points, or 0.21 percent, to 2,312.41.
The S&P 500 has risen every trading day so far in 2010, the second-longest streak starting a year since 1987's seven straight days of gains.
Data from China showed the country ended 2009 with record monthly imports of crude oil and soybeans and a strong appetite for iron ore and copper, while its exports rose 17.7 percent year-over-year, dwarfing a forecast for a 4 percent rise.
United Parcel Service rose 4.4 percent to $62.82 and FedEx Corp was up 2.7 percent to $87.25. An analyst at Stifel Nicolaus said both rose on expectations the unusually cold weather will drive U.S. consumers to online shopping, increasing shipment volumes.
UPS and Caterpillar helped lift the S&P industrial sector <.GSPI> 1.2 percent, making it the best performing group.
Citigroup raised its long-term oil price estimate to $80 per barrel from $65 and upgraded some energy companies, including Chevron Corp , whose shares rose 1.8 percent to $80.88.
Among decliners, Dow component Procter & Gamble shares fell 0.4 percent to $60.20 after BMO Capital Markets cut its rating on the stock on concern Friday's devaluation in Venezuela could hurt sales and revenue as products will be more expensive.
Among the top percentage decliners on the Dow was Walt Disney Co , which lost 2 percent to $31.25 after it was downgraded by Janney Capital Markets.
(Editing by Kenneth Barry)