Stocks closed higher after bargain hunters stepped in to drive up shares of financials, technology and industrials.
The Dow Jones Industrial Average closed higher after being down much of the day. The Nasdaq closed higher on strength in technology stocks, and the S&P 500 also ended higher. Financial stocks led a late afternoon buying spree that pushed seven of 10 S&P sectors higher. Industrial stocks and technology also helped drive the move upward.
"It was just buyers chasing buyers. Momentum chasing momentum," said one trader, who said big institutions started buying across the board in the afternoon. "They started nibbling in the dip."
Stocks were lower much of the day, and the major indices did not turn positive until midafternoon.
"I would expect to see this choppiness continue for the next couple of weeks, perhaps well into February," said Ted Weisberg, President of Seaport Securities, speaking to cbnc.com from the NYSE trading floor.
On Tuesday, traders will turn their attention to the first day of earnings. Dow component Alcoa will kick off the earnings season when it reports Tuesday after the bell.
Traders said the market mostly shrugged off comments from Federal Reserve Vice Chairman Donald Kohn, who spoke in Atlanta today. Kohn said he expects inflation to be lower in 2007 than it was in 2006 and that economic growth will be moderate, but sustainable.
Treasury prices closed slightly lower, sending yields higher, due to continuing reaction to last week's stronger-than-expected December jobs report.
Shares of retailer Gap rose after CNBC's David Faber reported the retailer hired investment banker Goldman Sachs to help review its strategic alternatives, including a possible sale.
Express Scripts plans a proxy battle to get four seats on the Caremark board, Faber also is reporting. The move came after Caremark rejected a $26.1 billioin offer from Express Scripts in favor of an agreed deal with CVS for $22.2 billion. Caremark was concerned about "questionable assumptions" in the Express Scripts bid as well as antitrust risks.
Shares of Venezuela'a largest telecom company plunged more than 14% before trading was halted in the ADR on the New York Stock Exchange. Venezuelan President Hugo Chavez called for nationalizing the company. CA Nacional Telefonos de Venezuela (CANTV) is the only Venezuelan company to be included in the Bank of New York's list of American Depositary Receipts. Verizon Communications has a significant stake in CANTV.
Oil prices turned lower after rising above $57 in early trading. New York light crude futuresclimbed higher earlier in the session following comments from OPEC that further supply cuts may be needed. But oil dropped on a technical move and worries about recent heating oil supply buildups due to warmer-than-normal weather in the Northeastern section of the United States.
Shares of energy stocks, including Exxon Mobil and BP , moved in tandem with oil prices.
Shares of RadioShack were up sharply after the company predicted a year-over-year rise in fourth quarter profit. The consumer electronics retailer credited the rise on improved margins and inventory and reduced expenses.
Technology Shares Move Higher
UBS upgraded technology stocks to overweight from equal weight. As part of the change, UBS upgraded several tech stocks including Dow component IBM, which hit a 2-year high.The broker upped its rating on IBM to buy from neutral and raised its stock-price target to $118, citing improving fundamentals in the company's core businesses.
Shares of Network Appliances also rose on a UBS upgrade.
Motorola closed down after issuing a profit warning last week.
Shares of Dow component Wal-Mart slipped after Goldman Sachs downgraded the world's largest retailer to neutral from buy, citing possible heavy markdowns.
Europe Finishes Mixed
London's FTSE 100 closed lower, while the Frankfurt DAX was higher and the CAC-40 was basically flat.
In an effort to fight off a hostile bid from the Nasdaq, the London Stock Exchange decided to release its third-quarter results this week rather than the end of the month to give investors as much financial information as possible, the Daily Telegraph reported. This morning the Nasdaq issued a statement saying the results won't affect its $5.2 billion hostile bid and that LSE investors should be warned that the share price will fall if the offer is withdrawn.
And Vodafone plans to start due diligence on a possible $18 billion bid for India's Hutchison, the Financial Times reported.
Stocks in Asia Struggle
Asian markets fell Monday, weighed down by resources and financial stocks. Both Australia and South Korea ended the session lower.
South Korea's Kospi Index closed lower, extending a three-session losing streak, as mobile phone makers such as Samsung Electronics fell after a profit warning from Motorola last week signaled a tough 2007 for the industry.
Australian shares also finished weaker, down for the fourth straight day, as miner BHP Billiton sank, weighed down by weaker metal prices. But building products makers advanced on strong data.
Hong Kong blue chips were down sharply in a broad sell-off, with banking shares especially hard hit after China raised the amount of funds which lenders must hold in reserve for the fourth time since mid-June. Singapore shares fell nearly 1%.
Japanese markets were closed for a holiday.