Stocks rose on Monday, led by consumer staples and healthcare but investors remained cautious amid concerns about possible ratings downgrade in Europe and developments in North Korea after the death of the reclusive state's leader.
The slim gains came after equities slid nearly 3 percent last week.
I think we're in the holiday mode already. The volume is low, and there is just so much uncertainly out there that people don't want to mess around and take bold bets, said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.
Lending some support to the market, plans emerged to ease Europe's debt crisis as finance ministers were set to discuss a draft text of a new fiscal compact later Monday that could be finalized by the end of January.
After agreeing to offer 150 billion euros to the International Monetary Fund to raise its crisis-fighting capacity, officials were also considering the size of individual bilateral loans to the fund.
The Dow Jones industrial average <.DJI> was up 34.89 points, or 0.29 percent, at 11,901.28. The Standard & Poor's 500 Index <.SPX> was up 1.45 points, or 0.12 percent, at 1,221.11. The Nasdaq Composite Index <.IXIC> was up 5.84 points, or 0.23 percent, at 2,561.17.
Among S&P 500 sectors, consumer staples <.GSPS> and healthcare sectors <.GSPA> were the top gainers. Consumer staples rose 0.4 percent and healthcare added 0.7 percent.
But trading could turn volatile as investors eyed developments in North Korea as the nation mourned the death of iron leader Kim Jong-il and state media hailed his untested son as the Great Successor of the reclusive state.
Adding to worries, Fitch warned Friday it may downgrade the ratings of France and six other euro zone countries, saying a comprehensive solution to the region's debt crisis was technically and politically beyond reach.
Major S&P 500 levels to watch this week were 1,200 and 1,260, said Ari Wald, an analyst at BBH Equity Strategy Research Team in New York.
1,200 is support from the index's downward sloping 100-day moving average and the uptrend connecting its October and November lows. A breach of this demand could stir additional technical selling to 1,130-1,150 intermediate-term support, he said.
1,260 is resistance from the index's downward sloping 200-day moving average and the downtrend connecting its October and December peaks. A breakout above this supply would argue for continued seasonal strength through the first quarter of 2012.
A rally in U.S. stocks fizzled on Friday, leaving major indexes with modest gains as investors again were torn between hope the U.S. economy was improving and fears over Europe's debt crisis.
(Reporting by Angela Moon; editing by Jeffrey Benkoe)