Stocks try to keep their chin up

NEW YORK (CNNMoney.com) -- Major gauges turned mixed in Monday trade, but remained mostly higher, as Wall Street got a reprieve from recent credit market woes.

The Dow Jones industrial average (up 79.01 to 13,260.92, Charts) was up about 0.5 percent, with 2-1/2 hours remaining in the session.

The broader S&P 500 (up 8.67 to 1,441.73, Charts) gained 0.5 percent while the tech-laden Nasdaq composite index (up 6.00 to 2,517.25, Charts) straddled the breakeven point.

With no economic readings and no major corporate earnings on tap, Wall Street investors initially showed some hesitation about wading back into the market amid lingering credit market fears.

"The unknown always generates fear and pretty much everyone believes there are more shoes to drop," Sid Bakst, senior portfolio manager at Robeco, Weiss, Peck & Greer, said Monday before stocks moved higher at midday.

Credit fears have helped roil stocks recently. Last Friday those worries, sparked by Wall Street bank Bear Stearns, sent the Dow industrials down over 280 points.

The lack of any new credit market developments, however, and a sharp dip in the price of oil, help provide some positive momentum for stocks in Monday trade.

U.S. light crude for September delivery lost $2.33 to $73.15 a barrel. Just a week ago, oil prices reached a record trading high of $78.77.

Despite gains among the major indexes, the market breadth was negative. Losers beat winners by 5 to 3 on the New York Stock Exchange on volume of 1.33 billion shares. Decliners topped advancers by nearly 3 to 2 on the Nasdaq, on volume of 1.69 billion shares.

Wall Street is also gearing up for the Federal Reserve's Tuesday policy meeting, where the central bank is widely expected to leave the Fed funds rate untouched at 5.25 percent, where it has remained since August 2006.

Wall Street will be paying particularly close attention to the accompanying statement for any clues about the central bank's outlook on interest rates and its stance on the recent woes in the credit markets.

"There's certainly the potential for disappointment if they don't say enough or do something unexpected," said Bakst.

In corporate news, just two days after Bear Stearns (down $3.69 to $104.66, Charts, Fortune 500) said it was weathering the worst financial market atmosphere in 22 years, the company announced Sunday its president and chief operating officer Warren Spector had resigned amidst the firm's recent credit problems.

Private equity firm Cerberus Capital Management named ex-Home Depot (up $0.35 to $36.54, Charts, Fortune 500) chief Robert Nardelli as Chrysler's chairman and chief executive officer. Nardelli left Home Depot in January under a cloud of shareholder disapproval.

Fast-food giant McDonald's (up $0.59 to $49.11, Charts, Fortune 500) said Monday it agreed to sell its Boston Market business to an unnamed party, in an effort to focus on its namesake brand.

American Home Mortgage (down $0.26 to $0.44, Charts), which closed its doors Friday, slashing nearly 7,000 jobs, filed for Chapter 11 bankruptcy protection Monday, sending shares of the battered mortgage lender 36 percent lower after last week's steep decline.

Japanese firm Fast Retailing raised its offer for the department store Barney's, a division of Jones Apparel Group, to $950 million, besting a previous offer from the Dubai-based firm Istithmar. Jones (down $0.33 to $20.18, Charts, Fortune 500) shares fell nearly 2 percent in morning trade on the New York Stock Exchange.

Dutch chemical maker Akzo Nobel (up $0.48 to $81.68, Charts) raised its bid for Britain's ICI to $16.3 billion and will get access to its rival's books.

And Belgian-Dutch financial group Fortis won shareholder approval for its $18-billion bid to buy rival ABN Amro (up $1.05 to $49.19, Charts).

Treasury prices edged lower, with the benchmark yield on the 10-year note rising to 4.71 percent from 4.69 late Friday. Bond prices and yields move in opposite directions.

European markets finished mixed, while Asian markets experienced a sharper selloff.

The dollar edged lower against the euro and gained versus yen.

COMEX gold for December fell $1.60 to $682.80 an ounce.