By Ryan Vlastelica
NEW YORK (Reuters) - Stocks rose on Monday but were off early highs as investors digested China's vow to allow a flexible yuan currency.
The move reassured investors about the global recovery and improved the profit outlook for many U.S. multinational companies, though markets were off session highs after recent gains, leaving the market vulnerable from a technical perspective.
Energy, other materials and manufacturing shares were among the leaders as commodities were boosted by the yuan's move higher against the dollar. The Dow industrials jumped more than 140 points in the morning.
Caterpillar Inc
China's yuan surged the most since its revaluation in 2005 following a surprise weekend announcement by China's central bank.
"This move is going to be good for global markets and help the bottom lines of companies with Chinese exposure," said Channing Smith, vice president of Capital Advisors in Tulsa, Oklahoma.
"However, markets have had a good run and investors haven't forgotten that we face headwinds with Europe and the labor market."
The Dow Jones industrial average <.DJI> was up 50.71 points, or 0.49 percent, at 10,501.35. The Standard & Poor's 500 Index <.SPX> was up 3.83 points, or 0.34 percent, at 1,121.34. The Nasdaq Composite Index <.IXIC> was up 1.25 points, or 0.05 percent, at 2,311.05.
The S&P 500 briefly broke above 1,130, the midpoint between its 2010 high and low points and a key technical mark but was unable to hold the level. The index was up more than 8 percent in the past 10 trading days.
Tech shares weighed on the Nasdaq, briefly sending it into negative territory, with Google Inc
Retailers were also a drag on the expectation of higher costs on imports from China. Dow component Wal-Mart Stores Inc
"It seems everything in the low-cost retailers is made in China," said Brian Gendreau, market strategist affiliated with Financial Network Investment Corporation in El Segundo, California.
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