NEW YORK (REUTERS) - The S&P 500 edged higher and was on track for a third record closing high on Monday, led by shares of banks and materials companies, while McDonald's fell on disappointing earnings.
Weaker-than-expected results from McDonald's Corp, the world's largest restaurant chain, kept the Dow from making gains after the company said full-year results would be "challenged" in the face of falling sales in Europe, its biggest market. Its shares lost 2.7 per cent to $97.60.
Analysts said the market is likely to trend higher in the absence of weak economic news but would need strong earnings and positive outlooks from companies to post significant gains.
"I think we're stuck in a range and we're very much at the top of this range," said Mr Brian Battle, director of trading at Performance Trust Capital Partners in Chicago.
"What will keep us from going up is fundamentals. We need economic fundamentals to drive market prices higher."
Financials rose for the 10th day in the past 12, with Bank of America leading the group. United States (US)-listed shares of UBS rose 2.9 per cent to $19.18 after the Swiss bank said its second-quarter profit beat forecasts despite a charge to settle a US lawsuit.
A rise in metal prices boosted materials shares, with Newmont Mining up 5.8 per cent to $30.36, enough to lead gains in the S&P materials sector.
The Dow Jones Industrial Average was down 0.81 points, or 0.01 per cent, at 15,542.93. The Standard & Poor's 500 Index edged up 2.87 points, or 0.17 per cent, at 1,694.96, and the Nasdaq Composite Index rose 8.87 points, or 0.25 per cent, at 3,596.48.
The S&P 500 has added more than 18 percent so far this year.
Recent data showed funds that hold US stocks gained US$16.96 billion (S$21.5 billion) in the week ended Wednesday, the most since June 2008.
The PHLX housing sector index fell 0.9 per cent after an unexpected drop in US home resales in June. The data also gave support to bets that the Federal Reserve will extend its rate of bond purchases to support the economy.
September, however, remains the most likely time for the Fed to announce that it will begin scaling back its US$85 billion a month in bond purchases, according to a Reuters poll.
Of the 109 companies in the S&P 500 that have reported earnings for the quarter, 64.2 per cent have beaten analyst expectations, while less than half have topped revenue estimates, data from Thomson Reuters showed.
Nearly one-third of S&P 500 companies are expected to report earnings this week, including Apple on Tuesday.
The options market is implying a move near 13.5 per cent for Netflix shares in either direction on earnings, said Mr Enis Taner, global macro editor at options research firm RiskReversal.com in New York.
That figure is substantially lower than the average share move of about 26 per cent over the past four earnings announcements.