* Profit news next week could prove catalyst
* S&P 500 seen testing its 2011 high
* Pfizer to sell unit to KKR for about $2.4 billion
* Dow up 0.1 pct, S&P off 0.1 pct, Nasdaq down 0.2 pct
* For up-to-the-minute market news see []
(Updates to afternoon trade; changes byline)
By Angela Moon
NEW YORK, April 4 (Reuters) - The S&P 500 struggled to
break above its high for the year on Monday as investors
awaited the coming earnings season that begins next week to
assess the strength of the stock market.
Investors were also on the lookout for the expected
increase in euro-zone interest rates this week.
The benchmark S&P 500 hovered slightly below 1,333, which
it has not closed above since mid-February. The level is
double the 12-year low hit in March 2009 and not far from
1,344, the S&P's highest since June 2008.
Bruce Zaro, chief technical strategist at Delta Global
Asset Management in Boston, said earnings season would likely
push the S&P 500 to 1,400 by mid-May as stocks come off the
seasonally strong November-April period.
"If we make a successful break from here, I think you've
got the 1,400 range and I think that's probably likely during
the final seasonally favorable push," he said.
The Dow Jones industrial average <> was up 12.22
points, or 0.10 percent, at 12,388.94. The Standard & Poor's
500 Index <.SPX> was down 1.35 points, or 0.10 percent, at
1,331.06. The Nasdaq Composite Index <> was down 6.22
points, or 0.22 percent, at 2,783.38.
On Friday, the S&P recorded its best two-week period since
December, and the Dow industrials <> hit their highest
intraday level since June 2008. Encouraging jobs data during
the week helped cement hopes of a labor market recovery.
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The European Central Bank, at its policy meeting on
Thursday, is expected to raise rates by 25 basis points from a
record low in reaction to rising inflationary pressures in the
euro zone. Two more 25-basis-point rate hikes are factored in
by year-end. <ECBWATCH>
"With the ECB on Thursday expected to raise interest rates
and the minutes from the March FOMC meeting out tomorrow where
maybe we'll get some color on the exit strategy debate, the
question this all brings is what will the impact be of higher
interest rates on still overleveraged economies," said Peter
Boockvar, equity stratgest at Miller Tabak & Co in New York.
The lack of significant economic data on Monday, nuclear
and other quake-related problems in Japan and unrest in Libya,
Syria and other countries in the oil-rich region of North
Africa and the Middle East could translate into low volume on
Wall Street. By the afternoon, the volume was the lowest so
far this year and followed the lowest weekly volume of 2011
last week.
Brent crude extended gains to a 2-1/2-year peak above $120
a barrel on concerns about Libya's conflict, Middle East
unrest and potential supply threats. U.S. crude oil futures
settled at $108.47 a barrel, up 53 cents, for the highest
close since September 2008. Investors are concerned that a
spike in oil could choke off a consumer recovery.
Japanese investment bank Nomura maintained a neutral view
on semiconductor stocks, citing weakened demand, peak gross
margins and higher capital spending in the sector.
The Philadelphia semiconductor index <.SOX> fell 1.2
percent and has lost 2.9 percent over the past four days.
Pfizer Inc <PFE.N> rose 0.5 percent to $20.48 after the
drugmaker agreed to sell its Capsugel unit, the world's
largest maker of hard capsules, to private equity firm KKR &
Co <KKR.N> for nearly $2.4 billion.
Shares of defense contractor General Dynamics <GD.N>
dropped 5.4 percent to $73.23 after one of its Gulfstream
Aerospace jets crashed on a test flight, killing four.
Southwest Airlines Co <LUV.N> shares dropped 2.2 percent
to $12.39 after about 70 flights were canceled for safety
inspections. A Southwest jet made an emergency landing with a
hole in the cabin on Friday. [].
(Reporting by Angela Moon; Editing by Jan Paschal)
