The Dow Jones industrial average was up 47.55 points, or 0.54%, at 8,897.81. The broader Standard & Poor's 500 index gained 3.4 points, or 0.35%, at 966.99. The technology-laden Nasdaq composite index lost 5.16 points, or 0.32%, at 1,590.75.
Major indexes challenged key technical levels -- 9,000 for the Dow average and 1,000 for the S&P 500 -- before investors took profits in late-afternoon trading.
In economic news Monday, the national ISM manufacturing gauge rose to 49.4 in May, from April's 45.4. The rise was in line with expectations, but was the third consecutive reading under 50, which indicates contraction. Some components, however, did rise above the 50 threshold, including new orders and production.
In other economic news, construction spending fell 0.3% in April, after a 1.0% drop in March. Total spending on construction was $862.6 billion, down from $864.8 billion.
On the docket for Tuesday's session are auto sales numbers, which provide a gauge of consumption. Economic research firm MMS International expects May sales to drop to 12.8 million from 13 million in April. Later in the week investors await first-quarter productivity, the non-manufacturing ISM index, and April factory orders.
Among stocks in the news Monday, biotechnology outfits ImClone (IMCLE
) and Genentech (DNA
) reported positive experimental-stage data on cancer drugs Erbitux and Avastin, respectively. ImClone and Genentech paced gains in biotech shares.
Software company PeopleSoft (PSFT
) announced a $1.7 billion acquisition of rival J.D. Edwards (JDEC
). Shares in PeopleSoft declined, while J.D. Edwards stock rose more than 7% on the news.
Airline stocks got a lift from Goldman Sachs' upgrade of AMR Corp (AMR
), the corporate parent of troubled carrier American Airlines. AMR shares rose more than 8%.
Shares of animation studio Pixar (PIXR
) jumped Monday after its movie Finding Nemo took more than $70 million at the box office in its opening weekend -- a record for a cartoon. Shares in Disney (DIS
), which co-produced the film, also rose.
The Federal Communications Commission voted to loosen restrictions on media ownership. According to new standards, broadcast networks can own television stations that reach 45% of the national audience, up from 35%. Also, the FCC lifted a ban on owning a newspaper and a television or radio station in the same market.
In the currency market, the dollar moved higher Monday after President Bush indicated over the weekend that the U.S. may pursue a stronger dollar policy.
On the commodities front, oil prices climbed to six-week highs, on concerns that OPEC would limit supply in the coming weeks.
Prices of U.S. Treasuries finished slightly lower Monday. ISM numbers indicated a slower decline in May than in April. Gains in the new orders and production ISM components pressured Treasury prices. Traders also digested comments from Federal Reserve Governor Bernanke, who, while in Japan, said the U.S. had no immediate threat of inflation.
The benchmark 10-year note's yield was 3.42%.
On Tuesday, vehicle sales data should hold attention. "A much stronger than expected pace would add to recent enthusiasm that the economy is picking up steam," notes MMS.
European stocks finished with gains Monday, encouraged by a sharp rally in the U.S. In London, the Financial Times-Stock Exchange 100 added 81.2 points, or 2.01%, to 4,129.3.
In Germany, the DAX Index gained 81.88 points, or 2.75%, to finish at a four-week high of 3,064.56. Sentiment in Germany was boosted by improved consumer confidence and April retail sales numbers. France's CAC 40 added 56.57 points, or 1.89%, to 3,048.32.
In Asia, markets ended higher. Japan's Nikkei index was up 122.66 points, or 1.46%, to 8,547.17. Shares of Japanese exporters ticked higher as the yen fell against the dollar. Meanwhile, in Hong Kong, the Hang Seng index increased 150.15 points, or 1.58%, to 9,637.53.