US stocks advanced on Monday as investors showed optimism that corporate earnings reports may come in better than expected, but crude oil prices at a fresh record near $54 a barrel curbed gains.
The US Treasury bond market was closed for the Columbus Day holiday on Monday. So some market participants were out of the office, resulting in thin volume. Corporate and economic news was light.
But the rest of the week will be busy as the third-quarter earnings reporting season moves into full swing, with reports from a number of major companies, including Intel Corp and Yahoo Inc on Tuesday, and Bank of America Corp and Citigroup Inc on Thursday.
Optimism over earnings offset higher oil prices, traders said.
"The equity market is just going into the height of earnings season and it's not really paying as much attention" to oil, said David Hegarty, head of equity trading for Commerzbank Securities.
"But crude is keeping all the rallies in check, and in order to get out of the range, we need crude to come off."
The Dow Jones industrial average was up 40 points, or 0.40 percent, at 10,095. The Standard & Poor's 500 Index was up 4 points, or 0.33 percent, at 1,126. The technology-laced Nasdaq Composite Index was up 10 points, or 0.52 percent, at 1,930.
Dealing was light, with around 720 million shares changing hands on the New York Stock Exchange by late afternoon.
Oil prices kept investors on edge, as crude jumped to $53.80 a barrel - the highest price since oil futures began trading on the New York Mercantile Exchange in 1983.
Higher energy prices have caused investors to worry that they will bite into corporate profits and consumer spending.
Meanwhile, shares of Home Depot Inc, a Dow component, rose almost 3 percent to $40.14, their highest point in more than two years, after weekly financial newspaper Barron's said shares of the largest US home improvement retailer may extend gains amid solid expected growth in sales of homes.
Home Depot was up $1.09, or 2.8 percent, at $40.11 on the NYSE in late afternoon trading.
Drug stocks also helped lift the Dow as they made some recovery from recent falls. Merck & Co rose 67 cents to $31.01, while Pfizer Inc gained 51 cents to $30.31.
Among declining stocks, however, were Texas Instruments Inc shares, off 0.4 percent, or 9 cents, to $21.96, after Deutsche Bank lowered its investment rating on the communications chip maker to "sell" from "buy."
Shares of Lone Star Technologies Inc fell 21 percent, or $8.13, to $30.07 after the oil equipment maker said it expects third-quarter profits to fall well below Wall Street estimates.
Of the companies due to report this week, Citigroup rose 36 cents to $44.92, and Bank of America gained 29 cents to $45.43. Intel added 26 cents to $20.81, but Yahoo dipped 4 cents to $34.13.