The Dow edged higher but the Nasdaq slipped, with investors torn between overseas growth and consumer weakness.
In an otherwise lackluster trading day, the US dollar index slipped 0.7 percent as investors became convinced that weakness in the job market would forestall any Federal Reserve efforts to raise rates and back the currency.
That boosted commodity prices and sent shares of construction equipment manufacturer Caterpillar sharply higher.
The Dow was around its intraday high by 2:30 pm ET. Much of the positive feeling came off a report showing Chinese exports hitting an 18-month high, suggesting the global economic recovery was progressing.
But investors also worried about the unemployment picture's impact on domestic stocks, and ditched shares of some leading consumer companies.
Gold jumped about $20 an ounce while oil rose as much as 1 percent, boosted also by a surge in Chinese imports, before surrendering a good chunk of its gains.
Monday officially kicks off quarterly earnings season and Alcoa will be first the plate. That won't happen until after the closing bell, but will help set the tone for the rest of the week and beyond. Shares rose today as the commodity play helped the aluminum giant.
Caterpillar led the Dow 30, but Home Depot fell more than 2 percent.
Microsoft weighed the Nasdaq as well as the Dow and S&P 500.
Disney and American Express also took hits, the latter after Barron's warned that the credit card leader's meteoric rise may have run its course and advised investors to take profits.
Amazon and Juniper were among the big losers on the Nasdaq, which underperformed its counterparts.
As the dollar slipped and China reported a boom in imports, selected sector stocks gained but the SPDR Energy ETF turned negative. Barrick Gold benefitted from the surge in gold prices but had halved earlier gains.
Consumer stocks were broadly weaker, with Avon Products sagging more than 2 percent and the Dow Jones US Cosmetics Index down nearly 1.5 percent in early trading.
Elsewhere, Time Warner Cable shares gained after Barron's said the stock had the potential to rally 30 percent in 2010.
The S&P 500 is coming off its best weekly gain since the week ended Nov. 6.
Despite the weak day, fear continued to drain from the market. The Chicago Board Options Exchange's Volatility Index continued its plunge, falling nearly 4 percent.
Volume was fairly thin, with about 610 million shares changing hands on the New York Stock Exchange by 2:30 pm ET. Market breadth was slightly positive with 458 new highs against just one new low.
STILL TO COME:
Monday: 10-Year TIPS Auction (1 pm); Fed's Lockhart speaks; ATB: Alcoa earnings.
Tuesday: Trade Balance; 3-Year note auction.
Wednesday: Mortgage applications; oil inventories; 10-Year note auction; Beige Book.
Thursday: ECB rate announcement; Retail Sales; Jobless Claims; Import/Export prices; natural gas inventories; 30-Year bond auction.
Friday: Consumer Price Index; consumer sentiment; BTB: JPMorgan Chase earnings.