The Nasdaq gained on Monday after positive broker comments lifted large-cap technology shares, though sustained worries about Europe's banking system restrained the Dow and the S&P 500.
Apple Inc rose 3.4 percent to $250.45 and led tech stocks higher after Morgan Stanley raised its price target on the stock by $35 to $310 and added the company to its Best Ideas list.
Stocks have corrected sharply in recent weeks on fears of possible sovereign debt default in Europe. This past weekend, the Bank of Spain took over a small savings bank, CajaSur, a reminder that funding issues in Europe's financial sector have not receded.
Bank of America Corp fell 1.5 percent to $15.75 while JPMorgan Chase & Co slid 1.4 percent to $39.48.
Europe remains the dominant issue, and people suspect that the issues there will translate into slower growth in the United States, said Gary Shilling, president of investment research firm A. Gary Shilling & Co in Springfield, New Jersey.
Citigroup bucked the trend in banks, gaining 4.3 percent to $3.91 after Goldman Sachs upgraded the bank to buy from neutral. Goldman also cut Wells Fargo & Co to neutral from buy, sending the stock down 3.2 percent to $29.14.
The Dow Jones industrial average <.DJI> was down 24.72 points, or 0.24 percent, at 10,168.67. The Standard & Poor's 500 Index <.SPX> was flat at 1,087.64. The Nasdaq Composite Index <.IXIC> was up 11.68 points, or 0.52 percent, at 2,240.72.
International Business Machines Corp plans to buy Sterling Commerce from AT&T Inc for about $1.4 billion in cash, and Gentiva Health Services agreed to buy Odyssey HealthCare Inc for about $1 billion.
IBM slipped 0.2 percent at $125.19 and AT&T lost 1 percent to $24.60. Both IBM and AT&T are Dow components.
In contrast Odyssey climbed 37.3 percent to $26.48, and Gentiva rose 13 percent to $29.24.
Economic data on Monday showed sales of previously owned U.S. homes rose to a five-month high in April as buyers rushed to close on contracts before a federal home buyer tax credit expired.
The real question is what is going to happen now that the credit is gone, Shilling said. I suspect we could see a fairly nasty setback in May and succeeding months.
Campbell Soup Co posted a better-than-expected profit on higher sales in its key U.S. soup market and forecast full-year earnings at the high end of its target. The stock edged 0.2 percent higher to $35.56.
(Editing by Padraic Cassidy)