The Dow remained higher in mid-afternoon Monday amid a flurry of new M&A activity and an earnings beat from Caterpillar.
The Dow was up more than 20 points, led by Caterpillar , DuPont and Home Depot .
But there was some weakness in the banking, health-care and energy sectors, which dragged on the S&P 500and Nasdaq.
The Dow Jones Industrial Average has risen 11 of the past 12 sessions, and the Dow and the Nasdaq now have eight consecutive weekly gains. The Dow, the S&P 500, and the Nasdaq all registered new multi-year closing highson Friday.
Some market pros said the rally is due for a pause and investors should brace for a selloff.
“The highest we’re going to get in the rally is 11,800 in the Dow and at that point, we’re going to see some churning and rolling over," said John Carter, president of Trade The Markets. "And then in second half of 2010 and into 2011, we’ll see a lot of weakness."
But Art Cashin, director of floor operations at UBS Financial Services, said although the rally is "long in the tooth," market technicals are "quite strong and nowhere near signaling a top."
Traders are hedging their bets: Just 28 percent said they were bullishon the market over the next six months, according to the latest survey of trader sentiment from Charles Schwab, down from 50 percent in a prior survey. And, 40 percent said they're protecting themselves against risk by trading options.
Some encouraging news on the employment front: Thirty-seven percent of firms say they plan to hire new workersthis year, compared with 29 percent in January, according to a survey from the National Association for Business Economics.
Earnings season is still in full swing this week with 164 S&P 500 companies set to report their quarterly numbers.
Dow component Caterpillar beat earnings expectations and raised its full-year outlook to $2.50 to $3.25 a share.
Whirlpool shares jumped more than 10 percent to lead the S&P 500 after the appliance maker topped forecasts and raised its full-year outlook.
Meanwhile, Humana shares skidded and became one of the S&P 500 laggards despite a solid earnings report: The health insurer beat expectations and raised its forecastamid an increase in Medicare enrollments.
Other health insurance firms such as UnitedHealth, WellPoint and Cigna also took a hit.
Citigroup shares fell after the government said it is selling 1.5 billion shares of the 7.7 billion it owns in the bailed-out bank. The sale should net a tidy profit for the government, which took its stake in Citi at $3.25 a share — the stock is currently trading at nearly $5.
Goldman Sachs shares dropped as traders continue to watch the fraud case against the Wall Street titan unfold to determine the severity of the charges — and implications for the firm's future. One of the latest details on the case is that the trader at the center of the case, Fabrice "Fabulous Fab" Tourre apparently talked about the subprime mortgage market in love letter to his girlfriend.
Rochdale analyst Dick Bove said both Citi and Goldman remain good buys, despite obstacles for both companies.
Goldman Sachs executives including CEO Lloyd Blankfein and Tourre are scheduled to appear in front of a congressional committee Tuesday.
Financials were the day's biggest decliner amid worries about financial regulation as the Senate moved closer to launching a debate on financial reform. Meanwhile, Sen. Richard Shelby, a Republican from Alabama, said he believes all 41 Republican senators would vote againstlaunching a floor debate on the bill, focusing instead on making changes to the bill, crafted by Sen. Chris Dodd, a Democrat from Connecticut.
Concerns about Greece's financial situation amid rising bond yieldswere hanging over the market as well as concern about Portugal as credit-default swaps there hit a record high.
The dollar roseagainst the euro as confusion about the timing and amount of emergency aid for Greece prompted investors to sell the euro. Gold heldnear $1,155 an ounce and oil prices fell below $84 a barrel.
Energy stocks declined after the Federal Trade Commission said it is investigating whether some of the world's largest oil companies violated antitrust laws.
The investigation involves as many as a dozen companies including oil giants ExxonMobil , Chevron , BP and Royal Dutch Shell.
Tech stocks were also weak after a downgrade on Dell.
Dell shares fell about 2 percent, making them one of the biggest drags on the Nasdaq 100, after Standpoint Research slashed its rating to "hold" from "buy," saying the firm is now fairly valued.
Other large-cap techs were also lower, including Google and Research In Motion .
Meanwhile, Home Depot and Lowe's shares rose as home-improvement projects showed signs of a comeback. According to a survey by American Express, 62 percent of homeowners said they planned to embark on home-improvement projects in 2010, spending an average of $6,200 on enhancements. Deutsche Bank also raised its price targets on the two home-improvement giants.
More news on the M&A front today: Hertz agreed to buy rival Dollar Thrifty for about $1.2 billion, in a major consolidation move for the rental-car market.
Consolidation was also a key theme in the airline sector, with talks between UAL and Continental continuing about a possible merger. The deal may have hit a potential snag over the price of a proposed stock swap deal, according to published reports.
And Stifel Financial has agreed to buy buy Thomas Weisel Partners, a high-tech investment bank, in a stock deal valued at $300 million.
No major economic numbers are set for release Monday, although the rest of the week is quite busy, with a two-day Fed meeting starting on Tuesday and reports on GDP and consumer sentiment later in the week.
MONDAY: Earnings from Texas Instruments after the bell
TUESDAY: 3G iPads to ship; Goldman execs. testify before Senate; two-day Fed meeting begins; Earnings from DuPont, Ford, 3M, US Steel, Broadcom
WEDNESDAY: GE and BofA shareholder meetings; Weekly mortgage applications; Weekly crude inventories; Fed announcement (2:15 PM ET); Earnings from Comcast, ConocoPhillips, Corning, Sprint, Visa
THURSDAY: Weekly jobless claims; Earnings from ExxonMobil, P&G, Aetna, Bristol-Myers Squibb, Burger King, Kellogg, Motorola, Time Warner Cable, Viacom
FRIDAY: Berkshire Hathaway annual meeting; AT&T shareholder meetings; GDP; consumer sentiment; Earnings from Chevron
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