Stocks traded mixed Monday, as blue chips advanced and small stocks slumped, yet the market was still on track to start the year with two straight months of gains.
TheDow Jones Industrial Averagerose more than 85 points, continuing a turnaround that began Friday, afterstocks ended higher but still snapped a three-week winning streak.
The blue-chip index was on track to rise 2.8 percent this month, following a 2.7 percent gain in January. Of the 26 times the Dow gained in the first two months of a year, only once has it finished the year with a loss. (Read More: Stocks — A Promising Start to 2011?)
Most Dow components gained, led by Hewlett-Packard, Johnson & Johnson and 3M, while Intel fell.
The S&P 500 rose slightly, while the tech-heavy Nasdaq traded flat. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 19.
Among the key S&P 500 sectors, utilities, telecom and consumerstaples rose, while technology and energy declined.
Monday's split market—with large caps outpacing small—comes at the end of the month, when portfolio managers are likely to dress up their portfolios with strong performers.
"It's end-of-the-month window dressing, that’s what we were expecting to see today," says Marc Pado, U.S. market strategist at Cantor Fitzgerald.
Also, weak figures on consumer spending released by the Commerce Department earlier in the session added to worries that consumers are no longer poised to spend, Pado said. Investors have been concerned that rising gas prices, if they persist, will hurt consumer spending going forward.
"Adds up to the fact we may have gotten ahead of ourselves, that consumption would return to normal," he said.
Intel and other chip stocks, which have been driven higher by consumer interest in smartphones and tablets with the latest chip technology, suffered on Monday. HP, however, rose in something of a relief rally after the tech giant's shares lost 12 percent last week in the wake of a weak earnings report
The iShares Semiconductor ETF lost nearly 2 percent. MEMC Electronic Materials , Micron Technology and Nvidia all skidded.
Salesforce.com also sank Monday after news Microsoft succeeded in getting a court order to prevent a former employee from going to work for the cloud computing company. The move is a reversal from Friday, when Salesforce rose after reporting strong quarterly results.
The major indices had started out the session strong as oil prices eased below $97 a barrelin the wake of reassurances about supply from Saudi Arabia, and after St. Louis Fed Pres James Bullardtold CNBC there's no chance the Fed will end its program of stimulating the economy. U.S. light crude settled at $96.97.
Reassurances from Saudi Aramco CEO Khalid al-Falih that extra supply needs had been metsomewhat eased investor concerns, although the potential effects of rising energy costs on the economic recovery remain worrisome.
And late on Friday, JP Morgan upped its forecast for 2011 Brent crude by nearly 14 percent as supply tightens on lower Libyan output.
In mid-day afternoon trading the oil sector was mixed with large companies such as ExxonMobil and Chevron trading on the positive end, while drillers including Diamond Offshore slipped.
The dollar slumped against a basket of currencies, while gold, which continues to provide a safe haven for investors nervous about the Middle East, closed above $1,409 an ounce.