Wall Street ekes out gain as caution rules before results

NEW YORK (Reuters) - Caution prevailed in the U.S. stock market on Monday, with indexes edging higher as investors kept bets to a minimum in front of earnings.

Volume was among the lightest of the year with investors wanting to see if corporate outlooks validate last week's surge, the strongest week in a year. Dow component Alcoa Inc AA.N reported its second-quarter results after the closing bell.

Earnings are “going to be the test to the durability of the bounce that started last week,” said Scott Marcouiller, senior equity market strategist at Wells Fargo Advisors in St. Louis.

The aluminum producer reported a second-quarter profit as sales rose 22 percent. Alcoa slipped 0.6 percent to $10.87 during the session, but jumped 3.9 percent after the bell.

“It was better than expected. We were hoping that Alcoa would have at least numbers that would match expectations, and obviously they did better, and that’s comforting,” said Charles Lieberman, chief investment officer of Advisors Capital Management, LLC in Paramus, New Jersey.

“This clearly gives us a good start for tomorrow.”

The Dow Jones industrial average .DJI added 18.24 points, or 0.18 percent, to end at 10,216.27. The Standard & Poor's 500 Index .SPX edged up just 0.79 of a point, or 0.07 percent, to 1,078.75. The Nasdaq Composite Index .IXIC gained 1.91 points, or 0.09 percent, to close at 2,198.36.

Resource companies' shares were the biggest drag overall, with the S&P materials index .GSPM sliding 1.1 percent after Chinese data over the weekend showed the country's copper demand dropped. Freeport McMoRan Copper & Gold Inc FCX.N lost 4.2 percent to $63.22.

U.S.-listed shares of BP Plc BP.N jumped 8 percent to $36.76 with the British company in talks with U.S. oil and gas company Apache Corp APA.N and others to sell assets worth up to $10 billion.

In addition to Alcoa, other Dow components set to report earnings this week include Intel Corp INTC.O, JPMorgan Chase & Co JPM.N and General Electric Co GE.N.

For the second quarter, analysts see earnings growth of 27 percent for companies in the S&P 500, according to Thomson Reuters data, up from previous readings in the past three quarters, which hovered around 22 percent. This would also exceed the 22.4 percent analysts were predicting at the beginning of the year.

The market got some support from M&A activity after Aon Corp AON.N said it will buy Hewitt Associates Inc HEW.N for $4.9 billion to create the world's largest human resource services company. Hewitt surged 32.2 percent to $46.79, while Aon sagged 7.1 percent to $35.62.

Also on the upside, Qualcomm Inc QCOM.O climbed 3.5 percent to $35.10 after Goldman Sachs added the company to its conviction buy list, saying the cellphone chip maker is a key beneficiary of accelerating smartphone growth.

About 6.34 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well below last year’s estimated daily average of 9.65 billion, and making this the second-lowest volume day of the year.

Despite the stock indexes’ slim gains for the day, the market’s breadth was decidedly negative.

Declining stocks beat advancers by a ratio of almost 2 to 1 on the NYSE, while on the Nasdaq, more than two stocks fell for every one that rose.

Reporting by Leah Schnurr; Additional reporting by Matthew Lynley; Editing by Jan Paschal