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The markets tacked on mild gains on Monday. Traders eyed events in the eurozone and also positioned themselves for key releases later in the week.
The Dow Jones Industrial Average rose 14.8 points, or 0.11%, to 13170, the S&P 500 climbed 0.48 point, or 0.03%, to 1419 and the Nasdaq Composite gained 8.9 points, or 0.3%, to 2987. The FOX 50 dipped 1.7 points to 1045.
The materials sector was the best performer, followed by industrial and health-care stocks. On the other side of the spectrum, the financial and consumer discretionary sectors lagged.
Italian Prime Minister Mario Monti revealed plans over the weekend to resign. While the timetable was not immediately established, he said if the fiscal budget for next year is passed quickly, he will resign immediately.
Monti, an expert in economics, was put into power last November after the resignation of Silvio Berlusconi with the mandate of fixing the eurozone's third-biggest economy and getting its fiscal house back in order. However, austerity measures there have been highly unpopular. Now, the move threatens to plunge the country back into political chaos and will almost certainly set the stage for early elections, analysts say. Indeed, Berlusconi has already thrown his hat into the ring.
"Irrespective of what we see in the next few days, political/electoral uncertainty coupled with campaign rhetoric and resultant headlines could yet see (bond) markets unsettled again," Alastair Newton, an analyst with Nomura wrote in a note to clients. "If markets do become unsettled over Italy we may see contagion into other eurozone economies, perhaps particularly Spain."
The yield on Italy's benchmark 10-year note jumped roughly 0.3-percentage point from Friday's close to 4.81%. Spain's 10-year yield climbed 0.2-percentage point to 5.62%. Both yields have fallen dramatically since September when the European Central Bank pledged to do whatever is necessary to keep borrowing costs for soaring uncontrollably as many market participants feared.
Market participants were also expected to pay close attention to budget talks in Washington, D.C. President Barack Obama and Speaker of the House of Representatives John Boehner met over the weekend for face-to-face talks. However, neither revealed the specific content. Boehner finds himself in a particularly tough position because he will need to convince disparate GOP caucuses in House to agree to any budget plan.
Elsewhere, McDonald's (NYSE:MCD) posted a bigger-than-expected increase in November same-store sales after a rare decline in October.
AIG (NYSE:AIG) said it reached a deal to sell its airplane leasing business to a consortium of Chinese companies for $4.8 billion. Honeywell (NYSE:HON) unveiled plans to buy Intermec for $600 million. Ingersoll-Rand (NYSE:IR) said it will spin off its residential and commercial security businesses. It also said it is boosting its quarterly dividend by 31% and announced a new $2 billion share buyback program.
There were no major economic reports due on the day. However, traders are preparing for the Federal Reserve's meeting that begins on Tuesday and ends Wednesday. The central bank will not only provide its latest monetary policy statement, but will also provide fresh economic forecasts. Fed Chairman Ben Bernanke will also be holding a press conference that day.
Energy futures were mixed. The benchmark crude oil contract fell 37 cents, or 0.43%, to $85.56 a barrel. Wholesale New York Harbor gasoline edged up by 0.03% to $2.598 a gallon. In metals, gold rose 0.52% to $1,714 a troy ounce.
The Euro Stoxx 50 slipped 0.21% to 2596, the English FTSE 100 drifted higher by 0.12% to 5922 and the German DAX gained 0.17% to 7531.
In Asia, the Japanese Nikkei 225 ticked up by 0.07% to 9534 and the Chinese Hang Seng climbed 0.39% to 22277.