updated 7/10/2007 7:12:55 AM ET 2007-07-10T11:12:55

Wall Street edged higher in an erratic session Monday, as investors were reassured by a drop in Treasury bond yields yet still remained cautious as second-quarter earnings season kicks off this week.

Major Market Indices

Investors were looking to corporate earnings to help give the market some direction in the coming weeks. Reports had their unofficial start after the closing bell when aluminum producer Alcoa Inc. released results that matched analysts’ projections.

In the meantime, Wall Street found some solace as the yield on the benchmark 10-year Treasury note dipped to 5.16 percent from 5.18 percent on Friday. There had been some concern that the steady rise in bond yields since June would crimp dealmaking.

Buyout activity continued Monday after Apollo Management LP’s Hexion Specialty Chemicals Inc. raised its takeover bid for chemical company Huntsman Corp.; Barron’s said FedEx Corp. might be the target of a buyout; and Coventry Health Care Inc. agreed to acquire Florida Health Plan Administrators, LLC, owner of Vista Healthplans, for $685 million.

A continuum of takeovers has given the stock market support in recent months. Shareholders of CBOT Holdings Inc. on Monday approved a merger with Chicago Mercantile Exchange Holdings Inc., a deal that will create the world’s largest derivatives exchange.

“There’s just not much earnings or economic news out there, and that has the market bobbing and weaving a little bit,” said Jay Suskind, head trader at Ryan Beck & Co. “Overall, there’s not a real catalyst to move the market one way or another, and I think the market will hover close to home.”

The Dow Jones industrials finished the day up 38.29 points, or 0.28 percent. The blue-chip index came within 8 points of its record close of 13,676.32 before falling back.

The broader Standard & Poor’s 500-stock index closed Monday up 1.41 points, or 0.09 percent, while the Nasdaq composite index added 3.51 points, or 0.13 percent.

Last week, Wall Street began the third quarter with positive data on the job market and the manufacturing and service sectors, and managed to finish Friday with a respectable gain. For the week, the Dow rose 1.51 percent; the S&P 500 rose 1.80 percent and the Nasdaq advanced 0.08 percent.

Monday was a light day for economic data. The Federal Reserve reported that consumer credit rose at an annual rate of 6.4 percent in May, far above the small 1.1 percent gain of April and about double what analysts had been expecting. For May, consumers increased their borrowing by $12.9 billion to a record level of $2.44 trillion. Economists had been forecasting that consumer borrowing would rise by a much smaller $6.5 billion.

“This is a really slow data week, with nothing significant out until you see retail sales on Friday,” said Brian Gendreau, an investment strategist for ING Investment Management. “We may be entering a period where investors might begin to pay more attention to earnings

Investors will be watching crude oil prices, which have been trading at their highest levels since last August. So far, high energy prices haven’t yet hurt overall U.S. consumer spending, but any sign that inflationary pressures are worsening could raise worries on Wall Street about an interest rate hike.

A barrel of light sweet crude fell 62 cents to $72.19 on the New York Mercantile Exchange. The dollar was lower against other major currencies, while gold prices spiked.

In corporate news, Huntsman shares were up 7 cents at $28.07 after private equity firm Apollo Management raised its offer by 2.8 percent to $28 per share.

Alcoa, the world’s second-largest aluminum producer, reported after the bell that second-quarter results fell about 4 percent but still matched analysts’ projections. Shares closed up 70 cents at $42.36, but lost ground in after-hours electronic trading.

FedEx surged $5.33, or 4.8 percent, to $116.17 on a report the package delivery company could become a target for private equity buyers because of its modest valuation and turnaround potential, according to a report in Barron’s.

CBOT shares fell $1.18 to $222.82 as shareholders voted on a combination with the Chicago Mercantile Exchange. CME shares fell $4.22 to $570.58. InterContinental Exchange Inc., which had also bid on the Chicago Board of Trade, rose 69 cents to $156.78.

Boeing Co., the world’s second-largest commercial airplane maker, rose $1.02 to $99.90 on reports it received orders for its 787 Dreamliner. The aerospace company on Sunday unveiled the jet, which already has more than $100 billion in order.

Lexmark International Inc., which makes printers, warned that a shortfall in consumer inkjet supply sales will hurt results in the second quarter. Lexmark dropped $3.15, or 6.3 percent, to $46.25.

Pharmaceutical and consumer products giant Johnson & Johnson said Monday its board approved the repurchase of up to $10 billion of the company’s common shares. The company currently has about 2.9 billion outstanding shares; it rose 59 cents to $62.72.

In Asia, Japan’s Nikkei stock average closed up 0.67 percent. At the close in Europe, Britain’s FTSE 100 was up 0.34 percent, Germany’s DAX index was up 0.36 percent and France’s CAC-40 was up 0.03 percent.

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