Stocks Get Pre-Earnings Boost

The major indices finish with modest gains as the Dow moves closer to its record.
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Updated from 4:11 p.m. EDT

Stocks in the U.S. logged modest gains Monday as traders geared up for the start of the second-quarter earnings season.

The

Dow Jones Industrial Average

rose 38.29 points, or 0.28%, to 13,649.97. The index is now only 26 points below its record close of 13,676.32 set on June 4.

Sixteen of the Dow's 30 components were higher, led by a 1.7% gain in

Alcoa

(AA) - Get Report

, whose second-quarter earnings report after the bell unoffically kicked off earnings season.

Boeing

(BA) - Get Report

was also up after the company officially unveiled its new 787 Dreamliner plane.

Elsewhere, the

S&P 500

edged up 1.41 points, or 0.09%, to 1531.85. The

Nasdaq

added 3.51 points, or 0.13%, to 2670.02.

In addition to Alcoa, this week will also feature names such as

GE

(GE) - Get Report

,

Genentech

(DNA)

and

Yum! Brands

(YUM) - Get Report

.

However, the number of reporting companies won't be as extreme in the next few days as it will be in the coming weeks.

"There's a generally positive feeling to the market, as people are expecting that second-quarter earnings will be better than expected," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "There was some resistance as we got near record highs, as investors are cautious of buying at this level. With big names releasing earnings, though, we might see a trend where people push stocks to all-time highs."

Volume rose from Friday's levels. About 2.51 billion shares changed hands on the

New York Stock Exchange

, as advancers topped decliners by a 5-to-3 margin. Volume on the Nasdaq reached 1.82 billion shares, with winners matching losers.

For stocks, Monday was a return to full-time trading after an abbreviated week that was marked by the Independence Day holiday. Last week, the Dow rose 1.8%. The S&P was up 1.5%, and the Nasdaq surged 2.4%.

Paul Nolte, director of investments with Hinsdale Associates, said that the upcoming earnings season will see "investors focused upon company's comments about the future, not so much of the past.

"The trading range that has existed over the past two months has been a boon to traders, however investors have been frustrated by the 'treadmill' activity, running fast but going nowhere," he added. "The market internals have been deteriorating for a while; however so far, the ultimate arbiter of breaking down -- prices -- has not done so yet."

Marc Pado, U.S. market strategist with Cantor Fitzgerald, argued that there are some positive signs as investors brace for the torrent of earnings.

"There is an air of optimism out there. The averages are moving quietly under their 2007 highs," said Pado. "The Nasdaq has consistently led this rally and is in new rally high ground. This is the type of leadership we want to see for the July rally. If investors are willing to reach out for returns and take on added risk, then that bodes well for broader market."

Among the names in the news,

Sony

(SNE) - Get Report

finished lower on word that the company will cut the price of its PlayStation 3 game console by $100 to $499. Sony gave back 10 cents, or 0.2%, to $53.04.

Printer maker

Lexmark

(LXK)

fell after warning on its second- and third-quarter results. The stock slid $3.15, or 6.4%, to $46.25.

Buybacks were back in focus, as Dow component

Johnson & Johnson

(JNJ) - Get Report

said it will repurchase up to $10 billion of its stock.

ConocoPhillips

(COP) - Get Report

followed suit by announcing a $15 billion buyback. Johnson & Johnson rose 59 cents, or 1%, to $62.72, while ConocoPhillips jumped $3.01, or 3.7%, to $84.05.

As for the day's research calls,

Home Depot

(HD) - Get Report

was upgraded to buy at Goldman Sachs, and

Tyco

(TYC)

was downgraded to sell at Citigroup. Still, Home Depot dipped 0.2% to $40.23, and Tyco slipped 3.6% to $51.25.

ThinkEquity lifted its price target on

Google

(GOOG) - Get Report

to $700, and at the same time the firm cut its rating on

Yahoo!

(YHOO)

to accumulate from buy. Google tacked on 0.6% to $542.56, and Yahoo! finished up 0.4% at $27.20.

In the absence of any data on the economic docket, Treasury prices were rising slightly, pushing yields downward. The 10-year note was up 7/32 in price to yield 5.15%, and the 30-year bond added 9/32 to yield 5.24%.

Energy prices finished mixed. The front-month August contract eased 62 cents at $72.19 a barrel, while gasoline rose 3 cents at $2.34 a gallon.

Meanwhile, metals prices gained ground. Gold rose $7.70 to finish the day at $662.50 an ounce, and silver was higher by 6 cents at $12.82 an ounce.

Overseas, markets were higher. Tokyo's Nikkei climbed 0.7%, and Hong Kong's Hang Seng jumped 1.3%. London's FTSE edged ahead 0.3%, and Frankfurt's DAX was rising 0.6%.