Stocks ended slightly higher on Monday in a light-volume session as investors stayed cautious ahead of corporate earnings and key auctions for European debt this week.
After breaking out of the gate with strong gains on the first day of trading in January, stocks have been confined to a tight range in daily moves and volume has been low. 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.
The Internet search company was the biggest drag on both the benchmark S&P 500 index and Nasdaq 100 <.NDX>.
Months of summits and meetings have still not convinced investors that Europe will avoid messy defaults or a break-up of the euro zone.
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.
Debt sales by Spain and Italy later in the week should provide insight about investors' confidence in plans to solve the euro zone financial crisis.
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, Kenny said.
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 a deal to avert a potential default.
The Dow Jones industrial average <.DJI> gained 32.62 points, or 0.26 percent, to 12,392.69. The Standard & Poor's 500 Index <.SPX> gained 2.89 points, or 0.23 percent, to 1,280.70. The Nasdaq Composite Index <.IXIC> gained 2.34 points, or 0.09 percent, to 2,676.56.
Volume was light with about 5.93 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, below the daily average of 6.6 billion.
Chip makers rallied, with the PHLX semiconductor index <.SOX> up 2 percent after Deustche Bank upgraded the sector.
Brocade Communications Systems Inc
Traders also await monetary policy announcements from the European Central Bank and the Bank of England due 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.
Advancing stocks outnumbered declining ones on the NYSE by 1,898 to 1,077, while on the Nasdaq, advancers beat decliners 1,422 to 1,067.
(Reporting By Chuck Mikolajczak; Editing by Kenneth Barry)