Stocks Hold to Modest Gains

Updated from 10:03 a.m. EDT

U.S. stocks were off their highs but keeping it just barely positive Monday as investors contemplated encouraging earnings from Bank of America (BAC Quote) and a new merger in the pharmaceutical space.

The Dow Jones Industrial Average was roughly flat at 11,494, and the S&P 500 added half a point to 1261. The Nasdaq gained 3 points to 2286.

As for corporate news, Swiss pharmaceutical company Roche made a $43.7 billion offer for the rest of Genentech (DNA Quote). Roche is already a 56% shareholder in the maker of cancer drug Avastin. Genentech shares jumped 13% on the news.

Yahoo! (YHOO Quote) was another headliner, as the company agreed to give investor Carl Icahn, who wanted the Internet portal owner to work a deal with Microsoft (MSFT Quote), a seat on its board. Yahoo! stock was edging downward.

In the earnings department, Bank of America posted second-quarter earnings of $3.41 billion, or 72 cents a share, down from $5.76 billion, or $1.28 a share, in the same quarter last year. Revenue, however, rose and topped expectations, as did profits. BofA also believes it will make money this year from the Countrywide Financial takeover. Shares were climbing 10%.

Merck (MRK Quote) and Schering-Plough (SGP Quote), originally slated to report Monday morning, are delaying their statements until after the market close to provide an update from a study on their joint venture, Vytorin. Merck lost 4.8%, and Schering-Plough tumbled 11%.

After the close, traders will also get results from Dow component American Express (AXP Quote), as well as Apple (AAPL Quote) and Texas Instruments (TXN Quote).