Tech Surge Leads Upswing

"There was strength in technology and further weakness in the energy sector," said Michael Sheldon, chief market strategist with Spencer Clarke LLC. "Volatility has clearly picked up, something investors will need to get used to this year."

Meanwhile, investors got some clarity on the holiday retail picture with the monthly release of chain-store sales reports, which brought many disappointments. Wal-Mart (WMT Quote) confirmed this weekend's announcement about its December sales, saying comparable-store revenue climbed 1.6% last month. Wal-Mart gained 23 cents, or 0.5%, to close at $47.78.

Target (TGT Quote), Kohl's (KSS Quote) and Federated (FD Quote) reported same-store growth for the month but came in below estimates.

Also among the laggards were Sharper Image (SHRP Quote), where comps fell 20%, and Pier 1 (LTD Quote), where same-store sales slid 10.7%.

The headline was specialty clothing retailers, most of which failed to meet Wall Street's forecasts and saw their shares decline. AnnTaylor (ANN Quote) and Limited (LTD Quote) were falling after missing sales estimates.

Hot Topic (HOTT Quote) saw comp sales fall 5.1%, forcing the retailer to reduce its fourth-quarter earnings projection. Shares plummeted 17% to finish at $11.23.

Elsewhere, the networking sector was active as Cisco Systems (CSCO Quote) said it would acquire IronPort Systems in an $830 million deal and JDSU (JDSU Quote) set plans to buy Casabyte.

On the economic front, the Institute for Supply Management said its services index dipped to a reading of 57.1 in December from 58.9 the previous month, matching expectations. A number above 50 indicates growth in the sector.