Stocks edged higher on Monday as investors showed caution ahead of corporate earnings and key auctions for European debt this week.
Debt sales by Spain and Italy later in the week should provide insight about confidence in proposed solutions to the euro zone financial crisis.
That is what the market wants to get a look at - what is it that these multinationals are seeing in the global environment that gives them pause, or is the tone going to be a little better than expected, said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.
There is this sense that we really need to see something that is going to convince us that this EU challenge ... is a headwind that can be managed.
After meeting in Berlin, German Chancellor Angela Merkel and French President Nicolas Sarkozy warned Greece it will get no more bailout funds until it agrees with creditor banks on a bond swap and pressed for an early deal to avert a potential default.
Investors have grown more skeptical about whether European politicians can craft a plan which moves the region closer to solving its debt crisis. This week's bond auctions by Italy and Spain will gauge the willingness of investors to pump more money into the region's troubled sovereigns.
The Dow Jones industrial average <.DJI> gained 25.96 points, or 0.21 percent, to 12,385.88. The Standard & Poor's 500 Index <.SPX> added 2.54 points, or 0.20 percent, to 1,280.35. The Nasdaq Composite Index <.IXIC> rose 5.01 points, or 0.19 percent, to 2,679.23.
Traders also eyed monetary policy announcements from the European Central Bank and the Bank of England, which will come on Thursday. Investors are keen to hear ECB President Mario Draghi's latest comments on ways to ease the debt crisis.
Fourth-quarter earnings for S&P 500 companies were expected to rise 7.8 percent from a year ago, according to a Thomson Reuters forecast, down from 17.6 percent, predicted in July.
The lower revisions were due in part to expected fallout from the euro zone debt crisis and the region's sluggish economic growth.
The S&P 500 faces strong technical resistance as it has been unable to pierce through 1,285, the closing high set in late October.
(Reporting By Chuck Mikolajczak; Editing by Kenneth Barry)