Stocks cling to gains

NEW YORK (CNNMoney.com) -- Stocks struggled to hold on to gains Monday afternoon, following a bigger morning rally sparked by the efforts of central banks around the world to keep money flowing despite credit fears.

The Dow Jones industrial average (up 45.61 to 13,285.15, Charts) added 0.3 percent with under 2 hours left in the session, while the the broader S&P 500 (up 6.03 to 1,459.67, Charts) index added 0.34 percent. The tech-fueled Nasdaq Composite (up 5.21 to 2,550.10, Charts) index increased by 0.2 percent.

Stocks have been whipsawed the last few months on fears about tightening credit after a period of widespread liquidity. At the same time, investors have been absorbing the impact of the slumping housing market, including the collapse of the subprime mortgage market - loans made to consumers with less than ideal credit.

On Thursday of last week, concerns about these developments intensified, sending stocks tumbling, with the Dow industrials seeing their second worst point loss of the year.

Friday started off on a bad note too, but investors managed to recover most of the day's losses by the close. That recovery mode continued Monday, particularly amid soothing moves from the Federal Reserve and other central banks around the world.

"I think partially what's driving the advance today is the lack of raw fear that we saw last week," said John Wilson, chief technical strategist at Morgan Keegan. "It's kind of like the relief you feel when someone has been hitting you in the head and then they stop."

He said that the market was responding well to the liquidity that was brought in by central banks. The European Central Bank (ECB) added another $65 billion to its monetary system, building on last week's series of cash infusions. The Bank of Japan (BOJ) also added $5 billion, building on last week's moves.

Plus, just as the market opened, the Federal Reserve injected an additional $2 billion in reserves to the nation's banking system after pumping $38 billion in Friday.

Also helping with sentiment: news out of Goldman Sachs (up $0.19 to $180.69, Charts, Fortune 500) that one of its troubled hedge funds is getting a $3 billion cash infusion from a team of investors.

And July retail sales beat expectations. Sales rose 0.3 percent in the month, above forecasts for a rise of 0.2 percent. Sales excluding autos rose 0.4 percent, meeting expectations.

While all the positives helped keep the major stock gauges in the plus column, gains were limited by weakness in select sectors, including gold, silver, homebuilders, banks and airlines.

In addition, a variety of small cap stocks declined, dragging down the Russell 2000 small-cap index.

Among stock movers, Blackstone Group (up $0.87 to $26.15, Charts) jumped after the private equity firm reported that it more than tripled its quarterly profit and revenue in the second quarter.

Qualcomm (up $1.04 to $38.93, Charts, Fortune 500) shares rose 2.5 percent after the wireless chipmaker's general counsel resigned amid ongoing legal battles with Broadcom (down $0.65 to $35.20, Charts) and other rivals.

Additionally, a number of stocks that got battered at the end of last week bounced back, including Dow components Alcoa (up $1.31 to $36.00, Charts, Fortune 500), Boeing (up $2.12 to $100.56, Charts, Fortune 500) and General Motors (up $0.55 to $34.40, Charts, Fortune 500).

Hewlett-Packard (up $1.48 to $48.69, Charts, Fortune 500), Dell (up $0.48 to $26.93, Charts, Fortune 500), Apple (up $3.60 to $128.60, Charts, Fortune 500) and Yahoo (up $0.63 to $24.57, Charts, Fortune 500) were among the tech stocks bouncing back.

Market breadth turned mixed. On the New York Stock Exchange, winners beat losers nine to seven on volume of 1.15 billion shares. On the Nasdaq, decliners topped advancers by a narrow margin on volume of 1.53 billion shares.

Treasury prices crept higher, lowering the benchmark 10-year note yield to 4.77 percent from 4.80 percent late Friday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar rose versus the euro and yen.

U.S. light crude oil for September delivery rose 58 cents to $72.05 a barrel on the New York Mercantile Exchange, giving up bigger morning gains.