Major stock indicators pulled well off their lows and ended mixed in late afternoon trading. Trading volume was light, which can skew the market's moves. The Dow Jones industrial average lost around 25 points after being down nearly 120 earlier.
The fluctuations after a long holiday weekend were orderly and suggested that traders were reluctant to give up on a five-week rally. The earnings reports and economic figures due this week could re-ignite buying if they beat Wall Street's modest expectations.
"If you get a couple earnings reports that are better than the worst that people expected then that might help," said Denis Amato, chief investment officer at Ancora Advisors.
The market was unsettled Monday by a New York Times report saying the Treasury has directed General Motors Corp. to lay the groundwork for a potential bankruptcy filing by June 1. GM might be forced to file if it cannot complete a plan to exchange debt for equity, according to the report.
In the final half-hour of trading, the Dow bounced up and down, eventually ending down 25.57, or 0.32 percent, to 8,057.81, according to preliminary calculations.
Broader stock indicators advanced. The Standard & Poor's 500 index rose 2.17, or 0.25 percent, to 858.73, and the Nasdaq composite index rose 0.77, or 0.05 percent, to 1,653.31.
Boeing fell 5 percent as analysts cut their ratings and estimates for the airline manufacturer after it said it would reduce production of some jetliners next year due. Chevron lost 2 percent after saying first-quarter earnings will be sharply lower due to falling oil and natural gas prices.
Investors are also looking to a spate of earnings results throughout the week, including reports from Goldman Sachs Group Inc., JPMorgan Chase & Co. and Citigroup Inc. Financial companies had been among the hardest hit by the economic downturn and credit crisis, but they have also helped lead a rally over the past month.
Goldman rose 5 percent, JPMorgan rose 1 percent and Citigroup rose 20 percent, while Bank of America Corp. rose 15 percent. Analysts said some of the buying could reflect traders stepping in to cover misplaced bets that banks would fall when they post results this week. Traders who sell stocks "short" are forced to buy to avoid further losses.
Les Satlow, portfolio manager at Cabot Money Management in Salem, Mass., said the banking system escaped collapse or an outright takeover by the government but that troubles remain.
"The specter of nationalization has been chased away," he said. "We're back to the reality that we have a severe recession with sharply deteriorating credit quality."
Investors have been placing bets that improvements at banks could help lift the economy. The Dow has rallied for five weeks, but last week showed increased volatility as investors prepared for earnings reports.
Some of the worries dissipated late last week Wells Fargo & Co. jolted investors with an announcement that it expected to report a $3 billion profit for the first quarter. Stocks surged Thursday on the news, giving stocks moderate gains for the week. Markets were closed for Good Friday.
On Monday, GM was the biggest decliner among the 30 stocks that make up the Dow as investors worried about what a bankruptcy might mean for the economy. GM fell 32 cents, or 15.7 percent, to $1.72.
Jamie Cox, managing partner at Harris Financial Group, said the possible consequences of a GM bankruptcy filing were troubling. "Think of the economic fallout potential," he said.
Investors are awaiting quarterly results this week from key companies in other industries, including Intel Corp., Johnson & Johnson and General Electric Co. Reports on inflation, housing and manufacturing are also due.
In corporate news, prescription benefits manager Express Scripts Inc. said it will buy the pharmaceutical benefit management operations of health insurer WellPoint Inc. for $4.68 billion. WellPoint gained $3.15, or 7.8 percent, to $43.49 while Express Scripts rose $6.94, or 14 percent, to $56.11.
In other market action, the Russell 2000 index of smaller companies fell 0.64, or 0.1 percent, to 467.56.
About three stocks rose for every one that fell on the New York Stock Exchange, where volume came to 1.08 billion shares.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note fell to 2.85 percent from 2.92 percent late Thursday. The yield on the three-month T-bill rose 0.18 percent from 0.17 percent late Thursday.
The dollar was mixed against other major currencies, while gold prices rose.
Light, sweet crude fell $1.19 to settle at $50.05 a barrel on the New York Mercantile Exchange.
Overseas, Japan's Nikkei stock average fell 0.4 percent. Major European markets were closed Monday for Easter.