The Dow and the S&P 500 closed at fresh 15-month highs as shares of big manufacturers advanced on strong Chinese economic data, but the Nasdaq fell as tech shares succumbed to profit-taking.
Monday officially kicked off quarterly earnings season with Alcoa reporting after the bell. The aluminum giant reversed a loss from a year earlier, but still reported earnings that fell well short of Wall Street's estimates.
In an otherwise lackluster trading day, the US dollar fell as investors became convinced that weakness in the job market would prevent the Federal Reserve from raising interest rates to support the currency.
That boosted commodity prices and sent shares of construction equipment manufacturer Caterpillar sharply higher.
Much of the positive feeling for stocks came off a report showing Chinese exports hitting an 18-month high, suggesting the global economic recovery was progressing.
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.
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 benefited 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 light, with about 715 million shares changing hands on the New York Stock Exchange approaching 3:30 pm ET. Market breadth was slightly positive with 475 new highs against just one new low.