U.S. stocks edged higher in choppy trade on Monday on optimism over holiday retail sales and a stronger-than-expected report on Midwest business activity.

Gains were limited as investors were worried that a possible debt default by two of Dubai's flagship firms could damage a global economic recovery.

Retail stocks were in focus as online sales were expected to be strong on Cyber Monday, even after data showed U.S. consumers spent much less per person than last year as the holiday shopping season started this weekend.

What you're seeing thus far is traffic looks fairly healthy. But of course it's what people are spending in the store that's going to determine how well the season went, said Dan Greenhaus, market analyst at Miller Tabak & Co in New York.

Amazon.com Inc hit an all-time, rising 2.6 percent to $135.14, while Abercrombie & Fitch Co gained 0.7 percent to $40.24 after an FBR Capital Markets upgrade.

What people forget about the comparisons to a year ago was there was huge sales because retailers were stuck with big inventories after the financial collapse, said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco.

A report from the Institute for Supply Management-Chicago showed business activity in the U.S. Midwest expanded more strongly than expected in November.

The Dow Jones industrial average <.DJI> gained 53.13 points, or 0.52 percent, to 10,363.05. The Standard & Poor's 500 Index <.SPX> rose 5.55 points, or 0.51 percent, to 1,097.04. The Nasdaq Composite Index <.IXIC> added 3.89 points, or 0.18 percent, to 2,142.33.

The Dubai government said Monday it will not take responsibility for the debts of the Dubai World conglomerate, squashing creditor hopes that the emirate would guarantee its liabilities. But investors expected tremors would be minor in U.S. equities markets.

(Reporting by Chuck Mikolajczak; additional reporting by Ellis Mnyandu; editing by Jeffrey Benkoe)