Stocks rose late on Monday as investors reassessed the potential damage of the fraud case against Goldman Sachs and earnings optimism grew.
Shares of Goldman Sachs Group Inc , which is expected to report blow-out earnings on Tuesday, reversed course to rise 1.6 percent to $163.32. Investors said the furor over Goldman started to die down during trading, allowing people to refocus on coming earnings.
Citigroup jumped 7 percent to $4.88 after the bank turned in its best result since 2007, and the Dow was led by a handful of companies that will report results later this week.
International Business Machines gained 1.2 percent to $132.23 ahead of its results, which came after the closing bell. But the stock eased 1.8 percent to $129.82 in after-hours trading even as the company nudged up its outlook for the full year and reported stronger-than-expected results.
Market watchers attributed some of the strength in the market to a Bloomberg report that the U.S. Securities and Exchange Commission had split 3-2 along party lines to approve an enforcement case against Goldman Sachs, citing two people with knowledge of the vote.
The fact that the vote was close has been the proximate cause for the stock's rally. This means it wasn't a clear cut decision by the SEC, said Doug Kass, president of Seabreeze Partners Management in Palm Beach, Florida.
The Dow Jones industrial average <.DJI> rose 73.39 points, or 0.67 percent, to 11,092.05. The Standard & Poor's 500 Index <.SPX> added 5.39 points, or 0.45 percent, to 1,197.52. The Nasdaq Composite Index <.IXIC> edged down 1.15 points, or 0.05 percent, at 2,480.11.
The Nasdaq stayed just below break-even as chipmakers fell and Research In Motion , maker of the BlackBerry, slipped 1.3 percent to $71.09. The PHLX semiconductor index <.SOXX> was down 1 percent.
Palm Inc skidded 12 percent to $4.92 after the resignation of the chief of its webOS phone software, while Morgan Keegan downgraded the manufacturer of the Pre handset.
Adding to concerns about the company, Sprint Nextel Corp said RadioShack is phasing out Palm's Pre and Pixi phones for two other Sprint devices. Shares of Sprint added 2.7 percent to $4.19.
On the economic front a gauge of the U.S. economy's prospects rose more strongly than expected to a record high in March, pointing to a steady recovery.
About 10.77 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, above last year's estimated daily average of 9.65 billion.
Declining stocks outnumbered advancing ones on the NYSE by 1,681 to 1,324, while on the Nasdaq, decliners beat advancers 1,672 to 1,009.
(Additional reporting by Jennifer Ablan; Editing by Kenneth Barry)