"The unrelenting rise in the price of oil is impacting company statements and how investors are looking at stocks. FedEx was the latest in a long line of casualty stocks reporting that they can no longer absorb the rising cost of fuel without it affecting the bottom line," said Marc Pado, U.S. market strategist, Cantor Fitzgerald.
The Dow Jones Industrial Average gained 30.45 points to 12,776.33, with six of its 30 components posting opening gains.
The S&P 500 rose 1.9 points to 1,390.18, while the Nasdaq Composite added 2.98 points to 2,448.50.
Crude-oil futures slipped sharply, retreating after a record-breaking 8% jump last week, with crude for June delivery down $1.54 to stand at $124.42 a barrel in electronic trade. .
U.S. stocks dropped sharply on Friday, after hefty losses from American International Group Inc. and another record high for oil prices.
"The market looks tired of rallying on bad news. After reaching up toward technical resistance, the averages began their pullback phase. While the momentum indicators are nearing neutral, it looks like we need oil to get off of our backs to focus on anything else," said Pado.
The dollar was stronger vs. the Japanese yen, up 0.9% to 103.67 yen, and also rose against the euro. The Wall Street Journal quoted a U.S. official in saying the Bush administration is leading an international effort to put a floor under the U.S. currency.
Also, Chicago Federal Reserve Bank President Charles Evans said the outlook for the economy remains uncertain, with risks of sluggish growth and higher prices roughly balanced.
The British pound was stronger after wholesale prices jumped an annualized 7.5% in April.
FedEx lower, Research In Motion rises
With oil prices on the rise, FedEx late Friday warned fourth-quarter profit would be hurt on fuel costs and weak volume.
FedEx shares dropped 1.6% in opening trade.
Research In Motion Ltd. gained nearly 4% as the mobile communications company introduced the BlackBerry Bold cell phone, which has integrated Wi-Fi and global positioning systems and is compatible with high-speed third-generation phone networks worldwide. It also announced a $150 million research fund with Royal Bank of Canada and Thomson Reuters plc.
European banking giant HSBC Holdings rose 3% after it reported a rise in first-quarter profits, as growth in emerging-markets offset $3.2 billion in U.S. loan impairments and $2.6 billion in global markets write-downs. The lender also sounded worries over inflation.
Other firms in the financial services industry weren't profitable. Bond insurer MBIA Inc posted a $2.4 billion loss and IndyMac Bancorp Inc. lost $184 million.
Sprint Nextel Corp. also reported losses of $505 million.
Cablevision Systems Corp. reached an agreement to buy 97% of the Long Island newspaper Newsday for $632 million plus $18 million in prepaid rent. Tribune's Sam Zell said the deal maximizes the value of Newsday and allows it to keep an interest.
In Tokyo, the Nikkei 225 rose 0.6%, while the FTSE 100 added 0.4% in London.
By Kate Gibson