Updated from 4:10 p.m. EST

Stocks closed slightly higher Monday, but the broad averages ended well below their session highs as an unsettled oil market kept investors rattled.

The

Dow Jones Industrial Average

gained 21.38 points, or 0.2%, to 10,688.77, while the

S&P 500

was up 2.33 points, or 0.18%, to 1263.82. The

Nasdaq Composite

added 0.77 point, or 0.03%, to 2248.47. The gains did little to erase memories of Friday, when the major averages shed 2% or more on concerns about blue-chip earnings and energy prices.

"Equity markets recovered some lost ground Monday as investors faced higher oil prices and other risks," said Michael Sheldon, chief investment strategist with Spencer Clarke LLC. "Market breadth was positive, too, but most sectors posted lackluster gains. The market outlook looks choppy-to-down over the near term."

About 1.64 billion shares traded on the

New York Stock Exchange

, with advancers beating decliners by a 5-to-3 margin. Trading volume on the Nasdaq was 1.92 billion shares, with advancers narrowly outpacing decliners 8 to 7.

The 10-year Treasury bond was down 2/32 in price to yield 4.36%, while the dollar fell against the yen and euro.

Oil eased slightly but remained stubbornly high after a Nigerian official downplayed the likelihood of production cuts at an OPEC meeting scheduled for next week. The newly benchmarked March contract finished down 38 cents to $68.10 a barrel after a choppy session. It was briefly over $69 earlier on a

Financial Times

report highlighting Iran's resolve to press ahead with nuclear research.

"The market had been ignoring the recent run in crude, brushing it off as temporary emotional buying as a hedge against economic sanctions against Iran," Pado said. "Whatever the reason, oil is back up against all-time highs, and that was making the markets nervous."

Stocks were aided by remarks from St. Louis

Federal Reserve

President William Poole, who believes the U.S. economy is "in a very balanced position." Poole said that he is less concerned about inflation than he was last year and that he thinks "we're very much in a stable inflation environment now, and that it's going to continue."

To view Gregg Greenberg's video take of this article, click here

.

"Friday was an ugly day, but it was an options

and futures expiration Friday, and that may have exaggerated the decline," Tower said. "Additionally, there were still a lot of stocks making new highs for the week as a whole. Longer-term traders can start looking for buying opportunities. I don't think there's any rush to find those opportunities, but it's too early to panic on the overall market trend."

Disappointing earnings from a handful of blue-chip companies sent the Dow to a 213-point swoon on Friday, erasing its gain for 2006. The profit trend continued Monday morning at

Bank of America

(BAC) - Get Report

, which said fourth-quarter earnings fell 2% from a year ago to $3.77 billion, or 93 cents a share. Adjusted earnings of 94 cents a share were a penny short of estimates. The stock slipped 23 cents, or 0.5%, to close at $43.96.

Elsewhere,

Ford's

(F) - Get Report

fourth-quarter earnings rose 19% from a year ago to $124 million, or 8 cents a share, and reported adjusted earnings that easily beat Wall Street forecasts.

Ford also unveiled a restructuring plan that calls for the elimination of 25,000 to 30,000 jobs in North America by 2012. The company will idle 14 manufacturing facilities and will reduce capacity by 1.2 million units, or 26%, by 2008. The stock gained 40 cents, or 5.1% to $8.30.

Another Dow component,

American Express

(AXP) - Get Report

, posted fourth-quarter earnings of $745 million, or 59 cents a share, down 17% from last year. Earnings before an accounting change totaled $751 million, or 60 cents a share, up 12% from a year earlier. Revenue climbed 9% to $6.44 billion from last year. The Thomson First Call consensus was for earnings of 59 cents a share on revenue $6.84 billion. American Express added 4 cents, or 0.1%, to $51.44.

By sector, the Amex Airline index was higher by 1.7%, the Amex Oil index was up 0.6%, the Philadelphia Semiconductor Sector index gained 0.6% and the Philadelphia/KBW Bank Sector index tacked on 0.2%.

After the bell Monday,

Texas Instruments

(TXN) - Get Report

posted fourth-quarter income of $655 million, or 40 cents a share, up from $490 million, or 28 cents a share, from a year earlier. Excluding a 3-cent-a-share charge relating to stock options, the company had EPS of 43 cents a share. Revenue rose to $3.6 billion, up from $3.2 billion last year. The Thomson First Call consensus was for earnings of 42 cents on revenue of $3.64 billion.

TI finished the session up 4 cents, or 0.1%, to $31.70 ahead of the report. In the after-hours session, shares were higher.

Tech stocks bore the brunt of last week's selling, with Internet leaders

Yahoo!

(YHOO)

and

Google

(GOOG) - Get Report

both falling by percentages in the double digits.

Bear Stearns upgraded Yahoo! to outperform on valuation, citing the company's pre-eminent position in the online advertising market and solid fundamentals. Yahoo! was climbed 43 cents, or 1.3%, to $34.17. Meanwhile Google surged $28.04, or 7%, to $427.50, erasing some of its 8.5% loss on Friday.

Supervalu

(SVU)

,

CVS

(CVS) - Get Report

and an investment group led by Cerberus Capital Management will purchase supermarket chain

Albertson's

(ABS)

for $17.4 billion in cash, stock and debt assumption.

Supervalu will now own Shaw's Supermarkets, Star Markets, Acme Markets, Bristol Farms, Jewel-Osco and some Albertson's-named stores, as well as in-store pharmacies under the Osco and Sav-On names. CVS will now own about 700 stand-alone Sav-On and Osco drugstores and ownership interests in drugstore real estate.

Albertson's finished up $1.31, or 5.4%, to $25.42. Supervalu gained $2.12, or 6.7%, to $33.97.

Shares of

Research In Motion

( RIMM) finished down 3.6% after the Supreme Court rejected an appeal to reverse a lower-court ruling that the BlackBerry violated wireless email patents held by NTP. The stock was off $2.37 to close at $64.25.

Nike's

(NKE) - Get Report

president and chief executive William Perez resigned from the company Monday, citing differences between chairman and founder Philip Knight and himself. Co-president Mark Parker will succeed Perez as president. Shares were lower by 79 cents, or 0.9%, to $83.41.

Among other ratings moves, UBS downgraded

Citigroup

(C) - Get Report

to neutral from buy, believing earnings growth will be tough to accomplish in 2006. Still, Citigroup rose 31 cents, or 0.7%, to $46.

On the economic front, the Conference Board said leading economic indicators for December rose 0.1%. Economists forecast a 0.2% increase after a revised 0.9% gain in November.

Before the start of trading Tuesday, earnings reports are anticipated from

Johnson & Johnson

(JNJ) - Get Report

,

McDonald's

(MCD) - Get Report

,

DuPont

(DD) - Get Report

,

Lucent

( LU) and

United Technologies

.

After the bell Tuesday,

Sun Microsystems

(SUNW) - Get Report

is expected to post a fiscal second-quarter loss of a penny a share.

Overseas markets were lower after Friday's carnage on Wall Street, in which the Dow, S&P 500 and Nasdaq each had their worst single-session point decline since 2003. In Europe, the FTSE 100 was down 0.2% to 5660, and Germany's Xetra DAX was flat at 5348. In Asia, Japan's Nikkei plunged 2.2% to 15,361, while Hong Kong's Hang Seng shed 1.3% to 15,465.