Updated from 4:23 p.m. EDT

Stocks in New York closed mixed Monday as an afternoon rally led by the financial sector pulled the market off its session lows and helped overcome the latest round of General Motors ( GM) bankruptcy angst.

The Dow Jones Industrial Average, down more than 100 points earlier in the day, ended with a loss of 25.57 points, or 0.3%, to 8057.81, while the S&P 500 was up 2.17 points, or 0.3%, to 858.73. The Nasdaq rose 0.77 points, or 0.05%, to 1653.31.

Financials propped up the major indices ahead of a string of bank earnings . Goldman Sachs ( GS), due to report before the open Tuesday, instead issued its numbers early. For the first quarter, the company had net revenue of $9.43 billion and earnings of $1.81 billion. Goldman also said it plans to sell $5 billion of stock to the public. Its shares added 4.7% in the regular session.

JP Morgan Chase ( JPM) will report on Thursday, followed by Citigroup ( C) on Friday and Bank of America ( BAC) next Monday.

Bank of America rose 15.4% to $11.02, and Citi surged 25% to $3.80, leading the Dow.

GM's shares, however, found little relief. The stock sank 16.2% to $1.71 after The New York Times reported that the U.S. Treasury is directing the struggling automaker to lay the groundwork for a bankruptcy filing by June 1. The move is designed to prepare the company should it be unable to get needed concessions from the United Auto Workers union and reach an agreement with bondholders.

"It's not a surprise," says Quincy Krosby, chief investment strategist at The Hartford, of the GM development. "But right now you have a market that is fairly overbought, and it's the official start of earnings season, so it's probably a market that has a reason to take profits."

The recent rally has left nearly 85% of the stocks on the S&P 500 above their respective 50-day moving averages, or "very overbought," Jeffrey Saut, chief investment strategist at Raymond James, wrote in a research report. "Therefore, just as we were aggressively bullish five weeks ago today on CNBC, we are now aggressively cautious thinking the envisioned 'buying stampede' is long of tooth."

Earnings season is about to be in full swing, and already preliminary reports have been coming in. Last week, Boeing ( BA) and Chevron ( CVX), tempered expectations with dim preliminary outlooks for the first quarter. Shares of those stocks were lower by 5.1% and 1.8%, respectively.

On the other hand, Wells Fargo ( WFC) said it expected its results to be well ahead of Wall Street expectations, sending a positive jolt through the major indices in the final session before the holiday. Shares were up 0.3% on Monday.

Microsoft ( MSFT) and Yahoo! ( YHOO) were making news away from earnings, as the companies have resumed their talks about search and advertising partnerships, according to a Wall Street Journal report. The report launched Yahoo! shares 7.1% higher to $14.42. Microsoft shares edged 0.4% lower to $19.59.

Another stock on the rise was MGM Mirage ( MGM), which added 17.9% to $6.25. Dubai World, MGM's partner in the multibillion-dollar Las Vegas City Center project, has proposed a plan that would fund the development through its completion, according to a Journal report on Friday.

In other news, prescription benefits manager Express Scripts ( ESRX) rose 15.5% to $56.81 after announcing that it will buy health insurer WellPoint's ( WLP) NextRX pharmaceutical benefit management divisions for just under $4.68 billion in cash and stock. WellPoint shares were also on the rise, adding 8% to $43.58.

Meanwhile, eBay ( EBAY) will buy a 34.21% stake in South Korean online marketplace Gmarket ( GMKT) from Interpark Corp. and its chairman for $413 million, according to a published report. Gmarket shares added almost 6% to $19.20, while eBay shares declined 2.6% to $14.63.

Also, HSBC ( HBC) is seeking to raise about $3.95 billion through the sale of three of its biggest office buildings, according to the U.K.'s Sunday Times. Shares were off by 1.1% at $34.65.

As for commodities, crude oil fell $1.25 to settle at $50.05 a barrel. Gold rose $12.50 to $895.80 an ounce.

The International Energy Agency cut its 2009 world oil demand forecast by 1 million barrels a day on Friday and said the tough economic conditions could further pressure consumption.

The dollar was recently strengthening slightly vs. the yen, but weaker against the euro and pound. Longer-dated Treasuries were rising. The 10-year was adding 18/32 to yield 2.9%, and the 30-year was gaining 28/32 and yielding 3.7%.

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