U.S. stocks closed higher for a second straight session in light volume trading as investors looked for signs of easing in geopolitical tensions.
Trading across all platforms of the New York Stock Exchange at close was about 400 million short of the 3.1 billion average.
"Besides seasonal factors of low volume, you have to remember that investors are still wanting to see how the economy is shaping up," said Peter Cardillo, chief market economist at Rockwell Global Capital. "Investors are more concerned that the market has not made up its mind on how to handle this monetary policy."
Equities had received a boost from Stanley Fischer, the vice chairman of the U.S. Federal Reserve, who said early on Monday that the recoveries in the U.S. and global economies had been "disappointing" thus far, indicating the Fed may not imminently tighten its monetary policy.
However, ahead of economic data and Fed speeches later this week, analysts said geopolitical developments are a primary indicator for investors.
President Barack Obama is scheduled to address the Iraq situation at 4:45 p.m. ET.
"Relatively uneventful day here," said Dan Greenhaus, chief global strategist at BTIG. "If you're going to get any volatility it's going to come from [overseas]."
But NATO chief Anders Fogh Rasmussen told Reuters that he saw a "high probability" that Russia could intervene militarily and that NATO detected no sign that Moscow was pulling back thousands of troops from close to the Ukrainian border.
Over in Gaza, Israel and the Palestinians agreed on Sunday to an Egyptian proposal for a new 72-hour ceasefire. President Barack Obama said on Saturday that U.S. airstrikes had already destroyed arms that Islamic State militants could have used against Iraqi Kurds. He did warn, however, that there would be no "quick fix" to the crisis.
"The market will handle bad news if it sees it coming," said Dave Lutz, head of ETF trading at Jones Trading. "We have to wonder how much of this is already built in. Not just specifically our market, but looking at the stress the German market has gone through."
Lutz said the market is reversing the losses and protection buying of last week, when the VIX skyrocketed as investors bought options on the S&P 500. Even with headlines from Monday morning headlines on NATO and Ukraine officials warning of a continued Russian presence on the Ukraine border, stocks continued to rise.
"They [the headlines] haven't gotten worse which was clearly a win," he said. "Plus we're past the weekend and you had a lot of angst building up ahead of the weekend." He said the market is also taking the limited air strikes in Iraq as a positive.
As earnings season draws to a close, quarterly reports and economic data for the week will shed light on consumer behavior.
"We'll certainly get a consumers' read on a multitude of geopolitical events," said Art Hogan, chief market strategist at Wunderlich Securities.
But as just 16 S&P 500 firms (less than 4 percent of index market cap) are expected to post results this week, analysts said markets will not move much on the news.
"Earnings are going to have a diminishing effect on the markets in the week ahead," said Nick Raich, CEO of The Earnings Scout.
He expects that lower oil prices and a decline in interest rates will lead to better forecasts for retailers, although earlier reports from other firms have likely already set the tone for stocks.
Over 85 percent of S&P 500 firms have now reported their second-quarter results. So far, the earnings-per-share (EPS) beat:miss ratio is running at a pretty solid rate of around 3:1, according to Deutsche Bank. The ratio is lower for sales revenue, with just short of two-thirds of firms exceeding consensus estimates.