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Wall St pares gains with upcoming data in focus

The S&P 500 has closed slightly higher than its session low as US Treasury yields pulled higher with investors braced for this week's testimony from Federal Reserve Chair Jerome Powell and the February jobs report.

Earlier in the session the indexes looked much stronger with the Nasdaq up more than 1 per cent at one point before gradually losing its gains. The biggest boost had come from iPhone maker Apple Inc after Goldman Sachs initiated coverage with a "buy" rating.

But equities gave up earlier gains as yields on US 10-year Treasury notes and the 2-year Treasuries yield came back from an early declines after data showed new orders for US-manufactured goods fell less than expected in January.

Rising bond yields tend to weigh on equity valuations, particularly those of growth and technology stocks, as higher rates reduce the value of future cash flows.

"The market is in a holding pattern because this week will be key to shedding light on what's going on with the US economy," said Irene Tunkel, chief US equity strategist for BCA Research in New York who will keep a close watch on February's US non-farm payrolls report, due out Friday.

"People are worried about the jobs number and the economic data because they're worried about what the Fed will do. Ultimately all roads lead to the Fed."

And with potential Fed rate hikes their key concern, Monday's data had already dampened investor enthusiasm, said Shawn Cruz, head trading strategist at TD Ameritrade in Chicago.

"The market pullback was because there is still a lot of work to do on inflation," said Cruz. "We're not seeing the type of demand slowdown we need to see. The whole point of the Fed hiking rates is to slow down the economy."

According to preliminary data, the S&P 500 gained 2.72 points, or 0.07 per cent, to end at 4,048.36 points, while the Nasdaq Composite lost 12.59 points, or 0.11 per cent, to 11,676.41. The Dow Jones Industrial Average rose 38.69 points, or 0.12 per cent, to 33,429.66.

The commodity-linked materials sector was weak on Monday after China set a lower-than-expected target for economic growth this year at around 5 per cent.

The three main US stock indexes had rallied on Friday and notched weekly gains after comments from Fed policymakers calmed jitters around aggressive rate hikes.

But San Francisco Federal Reserve Bank President Mary Daly said on Saturday that if inflation and labour market data continue to come in hotter than expected, interest rates would need to go higher and stay there longer than Fed policymakers had projected in December.

Investors will look for clues about the Fed's future rate hiking path when Powell testifies before Congress on Tuesday and Wednesday. Since Powell last spoke strong economic data and hotter than expected inflation have raised concerns the Fed will raise rates higher than expected or keep them higher for longer.

Traders expect at least three more 25-basis-point hikes this year and see interest rates peaking at 5.44 per cent by September from 4.67 per cent now.

Shares of cryptocurrency-related companies were volatile after Silvergate Capital Corp pulled the plug on its crypto payments network and raised doubts about the company's ability to stay in business.