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Stocks Waver Ahead of Earnings; Alcoa Slides

Stocks were largely flat Monday as materials and banks dragged and investors were a little jittery ahead of earnings season, which kicks off after the bell today with Alcoa. Techs were the day's best performers.

The Dow Jones Industrial Average fluctuated between postive and negative after gaining 5.3 percent last week, one of the market's best weeks in nearly a year.

The tech-heavy Nasdaq and S&P 500 also bounced around the flat line. The CBOE volatility index, widely considered the best gauge of fear in the market, was around 24.

“There’s low volume and no significant demand,” said Doug Roberts, chief investment strategist at ChannelCapitalResearch.com. “This is aimless drifting.”

Although Roberts expects a “reasonably decent” earnings season, he sees the holding pattern in the markets to continue until the fall and into mid-term elections.

Microsoft was at the front of the Dow pack following a report in the Wall Street Journal that the software giant may be teaming up with Fujitsu on cloud computing. Brokerage Janney Capital raised its ratings on the tech giant to "buy" from "neutral."

Walmart also rose as investors played it safe with some bets in consumer staples.

Materials, industrials and consumer discretionary were the weakest sectors, with United Technologies , DuPont and Alcoa at the back of the Dow pack.

The S&P Materials index slipped after Chinese data over the weekend showed the country's demand for copper dropped, sending Freeport McMoRan down more than 4 percent.

Meanwhile, several analyst moves also helped the tech sector: UBS raised its rating on Sandisk to a "buy" and Avondale started Cisco with a "market outperform" rating.

Earnings season gets underway in earnest Monday with Dow component Alcoa reporting after the closing bell and Chevron reporting interim results.

Some market pros say stocks could get a boost this earnings season.

"One thing that's kept us much more positive is the fact that corporate cash flows are huge," Bill Stone, chief investment strategist at PNC Wealth Management. "Cash flow has been extremely strong. It certainly bolsters the case when you look at cash flow yields. Companies are very mindful of their cash flows and have themselves set up very nicely."

Paul Miller of FBR Capital Markets said big banks will likely report strong earnings.

“We think the regionals have run a little bit too far in the first half of the year and they still don’t earn a lot of money at this point,” Miller told CNBC. “But when you look at JPMorgan and Bank of America , these companies are cheap on book.”

Several pros are betting on tech stocksthis earnings season, citing the fact that the sector has taken a beating amid fears about the sluggish global recovery.

Intel rose over 1 percent ahead of the chip giant's earnings, due out on Tuesday.

Google shares continued to rise following news last week that China renewed Google's license to operate a Web site in the country, ending a long standoff between the two.

Apple and AT&T were lower following news that a lawsuit against the companies that centers around their exclusive iPhone arrangement and the quality of AT&T's network can continue as a class action case.

Treasurys were little changedafter the latest round of three-year note auctions. The $35 billion sale fetched a high yield of 1.055 percent and the bid-to-cover ratio was 3.20.

The sale will be followed by auctions of $21 billion in 10-year notes Tuesday and $13 billion in 30-year bonds Wednesday.

Meanwhile, BP shares rose more than 7 percent after the oil giant said it expects to cap the gushing Gulf oilwell later today. BP is also putting the cumulative cost of dealing with the spill at $3.5 billion to date, and there are reports that the company may sell some assets to raise cash.

A weekend report suggested BP was in talks with Apache to sell about $18 billion in assets, including some in Alaska.

Oil prices slipped near $75 a barrelafter closing last week with a gain of more than 5 percent, its biggest weekly jump since May.

The euro fell against the dollar, pulling back from a two-month high and gold prices slipped below $1,200 an ounce, falling for the fourth time in the last seven sessions, as improved investor confidence boosted the dollar and sapped investment flows into the precious metals complex.

On the M&A front, Aon , the world's largest insurance brokerage, agreed to buy Hewitt Associates, a human-resources company, in a cash-and-stock deal valued at $4.9 billion.

And Playboy Enterprises surged almost 40 percent after founder Hugh Hefner proposed taking the company privateby buying all the shares he doesn't already own for $5.50 each; That stock is currently trading around $5.25.

This Week:

MONDAY: Earnings from Alcoa, Chevron (interim), CVX
TUESDAY: Small business optimism report; International trade; Treasury budget; Earnings from Intel, Yum
WEDNESDAY: Weekly mortgage apps; Government report on retail sales; import/export prices; business inventories; Fed minutes
THURSDAY: PPI; Empire State survey; weekly jobless claims; industrial production; Philly Fed survey; Yellen nomination hearing; Fed's Lacker speaks; Earnings from JPMorgan, Novartis, Google and AMD
FRIDAY: CPI; consumer sentiment; Earnings from Bank of America, Citigroup, GE and Gannett

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