The U.S. stock market's reaction to euro zone developments has become more muted over time.
The Dow slumped more than 8 percent last year between May 1 and June 1 on concerns that Spain and Italy would be dragged into Europe's debt crisis. While the Dow initially dropped last month in reaction to the Italian election results, it has since gained 4.6 percent. Likewise the market recovered much of the early loss Monday prompted by Cyprus's bailout deal.
The yield on the 10-year U.S. Treasury bond, which moves inversely to its price, fell to 1.96 percent from 1.99 percent as investors moved money into low-risk investments. Yields on bonds issued by Spain and Italy, the two most vulnerable large European economies, rose but only slightly. Spain's benchmark 10-year yield rose to 4.97 percent from 4.91 percent, and Italy's rose to 4.57 percent from 4.55 percent.
The stock market's resilience suggests that traders consider the Cyprus situation to be contained for now, said Quincy Krosby, a market strategist for Prudential. The threat of rising volatility may also deter the Fed from thinking about ending its economic stimulus program. The central bank starts its second two-day policy meeting of the year Tuesday.
"Absent the Cyprus flare-up, the markets were slowing a bit and it looked as if investors were digesting the gains and waiting for the next catalyst," said Krosby.
Financial stocks were the biggest decliners in the S&P 500. Investment bank Morgan Stanley fell 60 cents, or 2.5 percent, to $22.99. Citigroup dropped $1.02, or 2.2 percent, to $46.24.
Goldman Sachs said Monday that it had lifted its end-of-year target for the S&P 500 to 1,625 from its previous target of 1,575. The investment bank is forecasting that the U.S. economy will grow 2 percent this year and 2.9 percent next year. It also predicts that corporate deals and dividend payments will increase.
Deutsche Bank also said Monday it was lifting its year-end prediction for the S&P 500 to 1,625 from 1,600, forecasting an upturn in business spending.
Among other stocks making big moves:
* Schlumberger dropped $3.06, or 3.9 percent, to $76.34 after the oilfield services company said that its first quarter activity was below its expectations as customers reactivated fewer rigs than forecast.
* Boeing fell $1.25, or 1.4 percent, to $85.18 after archrival Airbus signed its biggest deal of all time on Monday. The European plane maker won an order from Indonesia's Lion Air worth $24 billion for its short haul A320 and A321 jets.