US stocks advanced modestly in thin trading on Monday as investors waited for signs from central banks about bolstering the weak economy and Apple's shares hit a record high after a major court victory. Investors are looking ahead to Federal Reserve Chairman Ben Bernanke's speech to a meeting of central bankers at Jackson Hole, Wyoming, on Friday.
Bernanke is likely to keep markets guessing about the timing of another round of bond purchases when he speaks, but he is likely to sustain expectations for action of some kind next month. The European Central Bank will meet on September 6, and investors expect some action to support the region's sputtering economy and tackle the debt crisis.
Germany's constitutional court is expected to rule on the legality of the euro zone bailout fund on September 12. "We are expecting a little bit of pickup on the buy side as shorts possibly cover positions anticipating a surprise from Dr Bernanke and the Jackson Hole meeting," said Fred Dickson, chief market strategist, D.A. Davidson & Co Lake Oswego, Oregon.
"It looks like it is just going to be very, very quiet up to that point, with a little bit of reaction possibly if we get some surprise economic headlines." Equities have rallied on growing expectations for a third round of quantitative easing from the Fed, as well as possible action from the European Central Bank. News from Jackson Hole could determine whether the rally that took the S&P index to four-year highs will be sustained.
The S&P 500 has been unable to stay above the April high of 1,422.38, which is seen as a key resistance point, the index finds support at the 1,400 level. Trading volume is expected to be extremely light before the Jackson Hole meeting at the end of the week. Just 2.2 billion shares changed hands by midday on Monday. Many market participants are out before the Labour Day holiday on September 3. Last week's volume was among the lowest of the year.
Apple Inc rose 2 percent to $676.50 after the iPad maker won a sweeping victory in a patent lawsuit against Samsung Electronics. Samsung said it would contest the verdict, which ordered the Korean company to pay $1.05 billion in damages. Earlier, Apple hit an all-time high of $680.87.
The Dow Jones industrial average gained 5.70 points, or 0.04 percent, to 13,163.67. The Standard & Poor's 500 Index rose 3.55 points, or 0.25 percent, to 1,414.68. The Nasdaq Composite Index added 9.62 points, or 0.31 percent, to 3,079.41. In merger news, car rental firm Hertz Global Holdings said it would buy smaller rival Dollar Thrifty Automotive Group for about $2.3 billion, ending years of an on-off take-over battle.
Shares of Hertz climbed 11.3 percent to $14.64 while Dollar Thrifty gained 7.4 percent to $87.01. Hudson City Bancorp Inc jumped 16.3 percent to $7.49 as the most actively traded stock on the Nasdaq after the company agreed to be acquired by M&T Bank Corp for $3.7 billion in cash and stock. M&T shares advanced 5.1 percent to $90.29. IBM Corp agreed to buy Kenexa Corp for $1.3 billion, sending Kenexa shares up 41.5 percent to $45.845. IBM, a Dow component, was off 0.7 percent to $196.38 and Kenexa surged 41.4 percent to $45.81.
Tiffany & Co climbed 6.9 percent to $62.53 after cutting it full-year profit and sales outlook, though the jeweller said it expected profit margins to improve later in the year.