Stocks rose on Monday but the gains looked shaky as investors weighed whether equities still have room to move higher if the Federal Reserve cuts interest rates this week.

Shares of Exxon Mobil and other energy companies led gains on the Dow after U.S. crude futures set a record at $93.20 a barrel on Monday.

The S&P has gained about 2 percent over the past week on speculation the Fed will cut its benchmark fed funds rate by 0.25 percentage point to 4.5 percent. The Fed's rate-setting committee will meet on Tuesday and Wednesday, with a decision expected on Wednesday.

We continue to be propelled by hopes of a rate cut. It seems most likely the Fed is going to do it, but the real question is what happens after, said Jim Awad, chairman of W.P. Stewart Asset Management in New York.

The recent advance by stocks in anticipation of a rate cut may leave no room for further gains once it comes.

My gut tells me we have discounted an awful lot and we're in for a reality check, Awad said.

The Dow Jones industrial average was up 40.40 points, or 0.29 percent, at 13,847.10. The Standard & Poor's 500 Index was up 2.84 points, or 0.18 percent, at 1,538.12. The Nasdaq Composite Index was up 4.01 points, or 0.14 percent, at 2,808.20.

The S&P financial sector index was down 0.4 percent. Thrifts and mortgage lenders were the worst-performing sub-sector on the S&P. Adding to the gloomy forecast for the sector, Swiss bank UBS AG warned it may face more write-downs on its fixed income portfolio, joining other major banks that have been bruised in the mortgage market crisis.

Exxon shares were up 1.6 percent to $93.70 on the NYSE. Chevron stock gained 1.2 percent to $92.72.

In earnings news, consumer electronics chain RadioShack said it swung to a quarterly profit from a loss a year ago. RadioShack shares jumped 7.4 percent to $21.08 on the NYSE.

Shares of Merrill Lynch & Co Inc were down 0.8 percent to $65.55 as investors awaited word on the fate of the investment bank's chairman and chief executive, Stan O'Neal. News reports have said Merrill's board was likely to force O'Neal's departure, possibly as early as Monday. Merrill's stock had surged on Friday on reports hinting at his departure.