Stocks were little changed on Monday as investors mulled the likelihood of more Federal Reserve action after Friday's surprise cut in the rate at which banks borrow from it.

Stocks surged on Friday after the central bank's emergency move to stabilize credit markets and keep the economy on track. World stock markets had fallen sharply in recent weeks as problems in the risky U.S. subprime mortgage sector spread to other markets.

Fresh news from the beleaguered mortgage market continued to unnerve investors. Thornburg Mortgage's shares fell 9.6 percent to $13.59 after chief operating officer Larry Goldstone said there was a crisis in investor confidence in the mortgage sector.

The market is taking some baby steps, trying to build on Friday's rally. We're digesting the Fed's move last week and putting things into perspective, said Richard Sparks, senior equities analyst at Schaeffer's Investment Research in Cincinnati.

But I don't think we've gotten the 'all clear'; the market still knows there are some hurdles to overcome.

The Dow Jones industrial average was up 18.13 points, or 0.14 percent, at 13,097.21. The Standard & Poor's 500 Index was down 0.18 points, or 0.01 percent, at 1,445.76. The Nasdaq Composite Index was up 4.30 points, or 0.17 percent, at 2,509.33.

Countrywide Financial Corp's shares were down 1.9 percent to $21.02 after the Wall Street Journal reported that the No. 1 U.S. mortgage lender had begun laying off employees at one of its lending units.

After rallying sharply on Friday, the S&P financial index -- battered in weeks of credit market turmoil --was down 0.9 percent. Citigroup, JPMorgan Chase were among the top drags on the benchmark index. Citi's shares slid 1 percent at $48.32 while JPMorgan fell 1.4 percent to $46.36.

Lowe's Cos shares rose 6.4 percent to $28.58 after the second-biggest U.S. home improvement retailer behind Home Depot Inc reported earnings that topped Wall Street's expectations.

EMC Corp rose 1.5 percent to $18.57 after a report in Barron's over the weekend said the shares of the No. 1 maker of corporate data storage gear could rise 20 percent or more over the next 12 months.

The broader market drew some support from lower oil prices. Powerful Hurricane Dean is forecast to steer away from the U.S. Gulf of Mexico that produces a third of the nation's oil and is home to half its refining capacity, sending U.S. crude down 90 cents at $71.08 a barrel.

A report by the Conference Board showed leading economic indicators rose 0.4 percent in July, matching economists' median expectation, after a 0.3 percent fall in June.