Hopes that global manufacturing activity is heating up lifted industrial stocks Monday ahead of an earnings report from Alcoa Inc.
The Dow Jones industrial average rose 46 points, while the broader Standard & Poor's 500 index advanced for a sixth straight day. The Nasdaq composite index slipped.
After the closing bell, Alcoa posted revenue that topped expectations, but profits excluding one-time costs fell short of forecasts. The report from the nation's largest aluminum producer gave traders one of the first looks at how companies fared in the final quarter of 2009.
The Alcoa numbers followed a report that China's exports jumped 18 percent in December. The bigger-than-expected increase came after 13 straight months of declines and raised hopes that the world economy is strengthening.
"The global economy is healing," said Roy Williams, CEO of Prestige Wealth Management Group in Flemington, N.J. Williams cautioned that the recovery will still face "a lot of potholes." On Friday, for example, the Labor Department reported a larger-than-expected number of job losses for December.
Some parts of the market that rose Monday signaled that investors remain cautious. Areas like utilities and consumer staples rose, which are seen as safer during tough economies because they produce necessities.
Earnings reports begin arriving in greater numbers next week and will shape traders' assessment of the economy.
Keefe, Bruyette & Woods Inc. equity strategist Fredrick Cannon said investors will be looking at the earnings reports for confirmation that improvements in economic indicators aren't just signaling a restocking of depleted inventories but instead show businesses are drawing customers.
"What we're looking for is signs of how strong the economy really is," Cannon said.
The Dow rose 45.80, or 0.4 percent, to 10,663.99. The S&P 500 index rose 2.00, or 0.2 percent, to 1,146.98, while the Nasdaq fell 4.76, or 0.2 percent, to 2,312.41.
The S&P 500 index has risen each day in 2010. The only other time the index has risen the first six trading days of the year was in 1987, when it advanced for seven straight days. The 2.9 percent gain so far in 2010 is a sharp contrast to the slide of 1.4 percent the S&P 500 index logged in the early days of last year.
Crude oil fell 23 cents to settle at $82.52 per barrel, while gold rose.
Caterpillar Inc., the world's largest maker of construction and mining equipment, rose $3.79, or 6.3 percent, to $64.13 after the report on China's exports and as some commodity prices gained.
Deere & Co., the maker of farm equipment, rose $2.32, or 4 percent, to $59.95.
The gains in the Dow and the S&P 500 index build on a strong first week for the new year. The major indexes rose last week.
The market's rise is a promising sign. The S&P 500 index has posted full-year gains 31 of the last 36 times that it rose during the first week of the year, according to the Stock Trader's Almanac.
Bond prices mostly rose Monday, sending the yield on the 10-year Treasury note down to 3.82 percent from 3.84 percent late Friday.
Three stocks rose for every two that fell on the New York Stock Exchange, where volume came to a light 967.1 million shares, compared with 994.2 million Friday.
The Russell 2000 index of smaller companies fell 0.57, or 0.1 percent, to 643.99.
Britain's FTSE 100 and Germany's DAX index gained 0.1 percent, while France's CAC-40 fell 0.1 percent. Japan's market was closed for a holiday.