Stocks ended mixed after a choppy session as investors hesitated to commit to the market ahead of Tuesday’s mid-term election and the Federal Reserve's decision on monetary policy.
The Dow Jones Industrial Average rose about 6.13 points, or 0.1 percent, to close at 11,124.62. The Dow gained about 125 points earlier in the session and then fell about 55 later in the afternoon, beginning a rocky start to November after the best October performance in four years.
Intel , Pfizer and Hewlett-Packard rose, while
Kraft and Chevron fell.
S&P 500 Index rose 1.12 points, or 0.1 percent, to 1,184.38, while the Nasdaq fell 2.57 points, or 0.1 percent, to 2,504.84. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose to nearly 22.
Telecom, tech and energy rose, while utilities declined.
Monday's market rally started after news that Chinese manufacturing was surprisingly strong,rising to a six-month high. That was followed by a surprisingly strong reading onmanufacturing data in the U.S.
But the dollar firmed against the eurofollowing the robust manufacturing data, helping to keep some of the market gains in check.
Investors are awaiting a key decision on Federal Reserve policy, expected Wednesday, and the October jobs report on Friday.
Banks fell after a report by ProPublicathat JPMorgan and Magnetar, a hedge fund, are being investigated by the Securities and Exchange Commission. The Keefe Bruyette Woods Bank Index fell more than 1.3 percent after the news.
The market's negative turn in the afternoon was most likely due to several other factors as well, including investors taking advantage of a boost in stocks to sell and reap gains.
"If you had positions and you wanted to sell into strength, it was the perfect opportunity," according to Todd M. Schoenberger, managing director of LandColt Trading.
Historically, going back over the last 10 years, stocks have risen 80 percent of the time on the first trading day of the week when it coincides with the first trading day of the month, as it did today, Schoenberger said.
That precedent aided stocks this morning. But the market is still experiencing a tug-of-war between bulls and bears, and with so much uncertainty in the market ahead of the elections and the Fed policy meeting, investors are more comfortable on the sidelines.
"A lot of the 'undecideds' are there, so people don’t know what the next 48 hours are going to bring," Schoenberger said.
Perhaps the biggest question this week centers on the Fed's decision over how much monetary stimulus, or quantitative easing,to provide the economy, said Craig Peckham, equity product strategist at Jefferies & Co.
"It's not a question of whether you get quantitative easing, but a question of how much, over what time line," Peckham said. He added that Jefferies strategists said the Fed meeting will provide the central bank authorities with an opportunity to more explicitly target what they want to see in the economy before declaring their monetary stimulus program to be a success.
General Motors, meanwhile, hopes to sell 365 million shares of common stock for $26 to $29 a share, raising as much as $10.59 billion in an initial public offering, Reuters reported. More details will be available Tuesday, Reuters said.
In another raft of earnings reports out Monday, Baker-Hughes shares rose to the top of the S&P 500 after the oilfield-services company reported third-quarter earnings that were four times higher on strong growth from its North American business, and the acquisition of BJServices.
Loews posted a smaller-than-expected profit, as its commercial insurance affiliate took a large loss on a deal to lay off asbestos risks.
Cooper Tire & Rubber rose after the tire company posted a better-than-expected quarterly profit, as strong pricing boosted its North American tire segment, and said it expects to increase production by 10 percent in 2011.
Shares of Humana rose slightly after the health insurer posted an unanticipated spike in third-quarter profit thanks to lower medical costs, and higher membership in its Medicare plans.
Of the two-third of S&P 500 companies that had reported earnings as of Friday, 77 percent beat estimates, according to data from Thomson Reuters. More major companies are expected to report throughout the week, including BP , MasterCard and Pfizer, which are slated to report Tuesday morning.
Pfizer was trading higher after brokerage Bernstein raised its rating on the pharma giant to "outperform" from "market perform."
In other health care news, McKesson gained after the pharmaceutical distributor said it plans to buy US Oncology, a privately-held cancer specialist, for about $2.16 billion.
And shares of Avanir Pharmaceuticals soared nearly 100 percent to more than double in value after U.S. regulators approved its treatment for a genetic disorderFriday, making it attractive to larger firms looking for a strong product that has cleared the regulatory hurdle.
Energy stocks were aided by a report by Oppenheimer, which raised the sector to "market weight" from "underweight." The brokerage cited earnings growth and stabilizing prices for crude oil. Specifically, Oppenheimer cited Exxon Mobil , ConocoPhillips , and Chevron .
Oppenheimer also raised Halliburton to "outperform" from "perform," saying margins for the oilfield services provider should continue to grow next year. Halliburton last week was the subject of a White House panel on the BP oil-spill disaster, after the group found the company used flawed cement in the Gulf of Mexico oil well.
Oil prices gained almost 2 percent to close near $83 a barrelafter Saudi Arabia's oil minister said consumers were looking for prices between $70 and $90, a higher range than he has previously described as ideal.
The semiconductor industry gained following a report that global semiconductor sales rose 2.9 percent in September from a month ago, the seventh consecutive period, according to the Semiconductor Industry Association. In addition, the sector got a boost from Macquarie, which upgraded Intel to "outperform," and AMD to "neutral," saying the companies will benefit from a end to an inventory correction for microprocessors.
Meanwhile, Wilmington Trust's shares plunged more than 40 percent after news the bank will be acquired by M&T Bank in an approximate $351 million stock deal. The price values the Delaware bank at 46 percent below Wilmington Trust's closing price on Friday.
Ambaccould be headed toward bankruptcyafter the bond insurer said it will file Chapter 11 if it can't find financing. Ambac shares sank more than 40 percent after the company missed an interest debt payment Monday.
AIG said it sold two foreign insurance units for $37 billion, which the insurer will use the funds to repay the government. The firm also closed its sale of American Life Insurance to MetLife for $16.2 billion, and completed a $20.5 billion initial public offering in Hong Kong for AIA Group.
Republicans are widely seen taking control of the House of Representatives after Tuesday’s election, while Democrats are expected to retain control of the Senate. The expectation of gridlock has so far been taken as a positive by investors.
The outcome of the Fed meeting has in some ways been much more debated and has created more anxiety for markets than the outcome of the mid-term election, as the promise of a new round of quantitative easing has driven down the dollar and pumped up stocks and commodities prices around the globe.
Most economists and fund managers surveyed by CNBCexpect the Fed will begin with a large amount of purchases.
In other economic news, The Institute of Supply Management's Manufacturing Index rose to 56.9, better than anticipated. The ISM Index was at 54.4 in September. Any number above 50 indicates growth.
Construction spending rose 0.5 percent, also better-than-expected.
Also, personal spending rose 0.2 percent even though income fell 0.1 percent in September. Economists had expected income to have risen 0.3 percent in September after jumping 0.5 percent in August, Briefing.com said.
On Tap Next Week:
MONDAY: After-the-bell earnings from Anadarko Petroleum and Principal Financial Group.
TUESDAY: Election Day, auto sales, FOMC meeting begins; before-the-bell earnings from BP, Pfizer, Kellogg and MasterCard; after-the-bell earnings from Electronic Arts
WEDNESDAY: FOMC announcement; MBA mortgage applications, Challenger job-cut report, ADP employment report, Treasury refunding announcement, factory orders, ISM non-manufacturing index, oil inventories; before-the-bell earnings from Time Warner, Aetna, CVS; after-the-bell earnings from Chesapeake Energy, News Corp, Prudential Financial and Transocean
THURSDAY: Chain-store sales, BoE announcement, jobless claims, productivity and costs, ECB announcement; after-the-bell earnings from Kraft and Starbucks
FRIDAY: Pending home sales index, non-farm payrolls report, consumer credit; Kansas City Fed President Hoenig speaks; before-the-bell earnings from Toyota; after-the-bell earnings from Berkshire Hathaway
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