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The blue chips erased a 100-point decline to close out the trading day little changed, but failed to hold the psychologically-important 13000 mark as traders weighed stronger-than-expected U.S. housing data with caution over high energy prices and other potential headwinds.
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The Dow Jones Industrial Average fell 1.4 points, or 0.01%, to 12982, the S&P 500 gained 1.9 points, or 0.14%, to 1368 and the Nasdaq Composite rose 2.4 points, or 0.08%, to 2966.
The Dow was flirting with closing above the 13000 mark for the first time since the financial crisis in 2008. Financial giants JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC) and American Express (NYSE:AXP) led the blue-chip index higher. On the opposite end of the spectrum, Hewlett-Packard (NYSE:HPQ), Boeing (NYSE:BA) and Alcoa (NYSE:AA) lagged behind.
Looking at the broad trends on Monday, technology shares performed strongly. Micron (NYSE:MU), the chipmaker, was a notable bright spot, rallying 7.8% after a Japanese competitor filed for bankruptcy. Materials, industrial and healthcare names posted solid gains overall as well.
Lowe's (NYSE:LOW) had a strong session after it revealed a strong full-year outlook and quarterly profits that came in-line with estimates.
Volatility, which had spiked earlier in the session, was up by a more modest 5%, as tracked by the CBOE's volatility index. Still, in a sign of the ongoing anxiety, traders bid up safe-haven U.S. Treasury bonds, pushing yields lower. The benchmark 10-year note yields 1.929% from 1.979%.
The U.S. economic calendar on the week is fairly full, with several key reports on tap. Contracts for pending sales of previously-owned homes jumped 2% in January, the highest level since April 2010, according to the National Association of Realtors. Economists expected a smaller increase of 1%. Pending home sales are up 8% on a year-over-year basis.
"The important thing to remember about pending home sales is that they are an important leading indicator for the all important existing home sales measures," Dan Greenhaus, chief global strategist at BTIG wrote in a note to clients following the report.
Energy prices have been a key worry for traders on Wall Street, although they did ease on the day. U.S. crude oil closed out the week last week at its highest value since May, while New York Harbor wholesale gasoline ended at its highest level since April.
Futures were pressured on the day by a stronger dollar. Generally, dollar-traded commodities trade inversely to the greenback because as it rises, the underlying material gets more expensive.
The benchmark crude contract fell $1.21, or 1.1%, to $108.56 a barrel. Wholesale gasoline slid 0.78% to $3.128 a gallon. In metals, gold slipped $1.50, or 0.08%, to $1,775 a troy ounce.
Still, market participants struck a cautious tone on the day.
"A lot of bank traders are sitting on their hands," Louise Cooper, a senior financial analyst based in London at BGC Partners said in an interview with FOX Business, adding that may traders are "exhausted" by the sheer number of headlines regarding Europe's debt crisis.
On the European front, Eurogroup President Jean-Claude Juncker said the council that is made up of eurozone finance heads and other senior officials will meet on Thursday to discuss the exchange of Greek debt by private bondholders and the enactment of austerity measures by Greece.
Germany's lower house of parliament, called the Bundestag, passed the $172 billion bailout package for Greece. While the deal was agreed to already by representatives of the 17-member eurozone currency bloc, all the of the parliaments now need to agree to it. The move was widely expected by analysts.
The European Central Bank is also set to allow banks to apply for a second round of three-year loans at an interest rate of 1% on Tuesday. The first round was seen by many analysts as critical in helping stave off a pan-European credit crunch that could have taken a big toll on financial markets.
The results are expected to be published on Wednesday, and market participants will be watching very closely to see how much money banks borrow. A number too high could mean that banks are in worse shape than expected, but one too low, on the contrary, could indicate banks are not taking advantage of the low rates. The hope, according to media reports, is that banks will lend the money to consumers and businesses, plus use the low-rate loans to invest in sovereign debt that will pay a considerably higher rate. In turn, the investment in sovereign debt may help to push yields lower, lessening countries' debt burdens.
The euro fell 0.35% to $1.3401, while the U.S. dollar rose 0.21% against a basket of six world currencies tracked by the dollar index.
European blue chips fell 0.42%, the English FTSE 100 dipped 0.33% to 5916 and the German DAX dropped 0.22% to 6850.
In Asia, the Japanese Nikkei 225 slipped 0.14% to 9,634 and the Chinese Hang Seng slid 0.88% to 21,218.