Stocks trade tight ahead of earnings season

NEW YORK -- Stocks traded in a narrow range Monday as investors grew more cautious with the approach of second-quarter earnings reports.

The Dow Jones industrial average rose 9 points. The Dow's modest advance followed its best week in a year.

Investors were making few big moves as they waited for the release of Alcoa Inc.'s earnings report after the close of trading. So they showed little reaction to news of several corporate acqusitions.

Insurance broker Aon Corp. said it will buy human resources company Hewitt Associates for $4.9 billion in cash and stock, and Playboy Enterprises Inc. founder Hugh Hefner offered to take the media company private. Also Avon Products Inc. agreed to buy Silpada Designs for $650 million in a bid to expand its jewelry business.

Investors generally see acquisitions as a sign that companies are confident and willing to spend cash to expand.

Earnings are likely to dominate trading for the next few weeks. Investors are seeking insight into the state of the economy not only from how well companies fared during the April-June period, but also from their forecasts for the coming quarters. In particular, investors want to see whether sluggish retail sales, waning consumer confidence and high unemployment have actually hurt corporate profits.

Ahead of Alcoa's report, analysts were upbeat but also expected that companies did see some impact from the choppiness of the economic recovery.

"We will have some good news" during earnings season, predicted Steve Stahler, president of the Stahler Group in Baton Rouge, La. "But it will be harder to find it."

Greg Estes, fund manager at Intrepid Capital Funds in Jacksonville Beach, Fla., said of companies' forecasts, "people are really wanting to see things get better." He said some industries like technology were more likely to report improvement versus those that rely more on consumer spending.

In afternoon trading, the Dow Jones industrial average rose 9.31, or 0.1 percent, to 10,207.34. The Standard & Poor's 500 index fell 0.08, or less than 0.1 percent, to 1,077.88, while the Nasdaq composite index rose 2.90, or 0.1 percent, to 2,199.35.

About two stocks fell for every one those that rose on the New York Stock Exchange, where volume came to a light 547.6 million shares.

Although the market just had its biggest weekly gains in a year, some analysts are unsure about how long the rebound will last. Trading volume remains light, which means many investors are still sitting on the sidelines, and the Dow is still down 9 percent from its 2010 high reached in late April.

Economic news this week should shed some light about how well the recovery is going. In addition to earnings reports, readings are also due on retail sales, weekly jobless claims, manufacturing activity, consumer sentiment and inflation.

Shares of Alcoa and other materials stocks slipped. A drop in commodities imports in China, particularly copper, hurt shares of companies like Freeport McMoran Copper & Gold Inc. Alcoa fell 17 cents $10.77. Freeport McMoran fell $3.20, or 4.9 percent, to $62.68.

Hewitt shares jumped $11.57, or 32.7 percent, to $46.97. Aon shares fell $2.51, or 6.5 percent, to $35.83. hewiPlayboy jumped $1.63, or 41.4 percent, to $5.57. Avon rose 3 cents to $28.30.

Bond prices traded in a tight range. The yield on the benchmark 10-year Treasury note, which moves opposite to its price, fell to 3.05 percent from 3.06 percent late Friday.

The Russell 2000 index of smaller companies fell 5.84, or 0.9 percent, to 623.59.

Overseas, Britain's FTSE 100 rose 1.2 percent, Germany's DAX index gained 0.2 percent, and France's CAC-40 rose 0.4 percent. Japan's Nikkei stock average dipped 0.4 percent after the ruling party lost elections Sunday.