Stocks were little changed on Monday as a late rebound in financial stocks offset nagging worries the Chinese government may tighten credit, a move that could slow growth in the global economy.
Banking stocks reversed course late in the session after Senate Banking Committee Chairman Christopher Dodd released a proposed financial regulation overhaul bill that investors said did not offer any surprises for the sector.
The Dodd announcement this afternoon may have brought in some negative sentiment and uncertainty waiting to see what he was going to say, said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
The KBW Banks index <.BKX> added 0.2 percent after falling as much as 1.2 percent earlier.
Shanghai's key stock index fell to its lowest close in five weeks on Monday on expectations China's central bank would step up monetary tightening measures to stem inflation that is rising faster than expected.
Major economic sectors driven by worldwide growth were hit hard on Monday, including energy, which fell 1 percent as crude oil declined, and chipmakers <.SOXX>, which were down 1.4 percent on brokerage downgrades.
The Dow Jones industrial average <.DJI> gained 17.46 points, or 0.16 percent, to 10,642.15. The Standard & Poor's 500 Index <.SPX> added 0.52 point, or 0.05 percent, to 1,150.51. The Nasdaq Composite Index <.IXIC> slipped 5.45 points, or 0.23 percent, to 2,362.21.
On Tuesday the interest-rate setting committee of the Federal Reserve holds a one-day meeting in which the central bank is widely expected to repeat its promise to keep borrowing costs exceptionally low for an extended period.
The S&P Energy index <.GSPE> was the worst performer among S&P sectors as crude oil declined 1.7 percent to $79.80 a barrel on a stronger dollar.
Also weighing on energy stocks was Consol Energy Inc
Semiconductors were a drag on the Nasdaq as analysts lowered their ratings on several chip stocks, including downgrades of Lam Research Corp
Lam Research dropped 4.6 percent to $32.68, KLA-Tencor fell 4.6 percent to $28.09 and Atheros declined 4.1 percent to $35.69.
Wal-Mart Stores Inc
About 7.24 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, the third slowest day of 2010 and below last year's estimated daily average of 9.65 billion.
Declining stocks outnumbered advancing ones on the NYSE by a ratio of about 4 to 3. On the Nasdaq, the decliners outnumbered advancers by a ratio of about 3 to 2.
(Editing by Kenneth Barry)