US stocks were slightly higher on Monday as a tug-of-war continued between investor optimism about US corporate earnings and fears about a possible lack of demand for Europe's debt at auctions this week. Major indexes bounced between modest gains and losses at midday, with the technology sector leading losses. Google Inc was off 3.5 percent at $626.94.
German Chancellor Angela Merkel and French President Nicolas Sarkozy met in Berlin, but traders expected little of significance to emerge. Investors grew more sceptical about whether European politicians could come up with a plan to solve the region's debt crisis. They were also cautious ahead of this week's bond auctions by Italy and Spain, which will gauge the willingness of investors to plough more money into the region's troubled sovereigns.
"Corporate earnings are one of the few strengths we have in this economy that is not very strong," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco. "But Europe is the biggest concern out there, sort of the disaster waiting to happen," and investors aren't able to shrug that off, he said. Traders also eyed monetary policy announcements from the European Central Bank and the Bank of England, coming on Thursday, with investors keen to hear ECB President Mario Draghi's latest comments on ways to ease the debt crisis.
The Dow Jones industrial average was up 18.50 points, or 0.15 percent, at 12,378.42. The Standard & Poor's 500 Index added 1.48 points, or 0.12 percent, at 1,279.29. The Nasdaq Composite Index put on 1.61 points, or 0.06 percent, at 2,675.83. 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. Alcoa Inc, the largest US aluminium producer, will unofficially kick off the earnings season after the bell. Alcoa rose 2.4 percent to $9.38.
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 debt crisis and the region's sluggish economic growth. Apple Inc gained 0.4 percent to $423.99 after Goldman Sachs raised its price target, saying the technology giant is set to report a healthy December quarter.
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