Stocks shed their early gains Monday with Wall Street nervously expecting a slew of earnings reports from heavyweights like Texas Instruments ahead of the Federal Reserve's policy-setting meeting later this week.

Stocks eked out gains Monday amid lingering questions over the strength of an anticipated economic recovery one day ahead of this year's first meeting of the Federal Reserve.

The blue-chip Dow Jones industrial average edged up 25.67 points, or 0.26 percent, to 9,865.75, propped up by auto giant General Motors Corp, while the technology-laced Nasdaq Composite Index rose 6.22 points, or 0.32 percent, to 1,943.92. The broad S&P 500 Index shed 0.22 of a point, or 0.02 percent, to 1,133.06.

"There has been a big upward move since the low back in September and people are saying, 'Gee, is the economy going to be strong enough to validate the earnings you need to support this?"' said Alfred Kugel, senior investment strategist at Stein Roe & Farnham. "Nobody really knows. The question is: 'How strong and how long will the recovery be?"'

Wall Street is looking to the Fed's decision on interest rates at the end of its two-day meeting Wednesday for confirmation the economy is recovering. The Fed is expected to leave interest rates unchanged, ending its aggressive monetary easing policy amid hints of economic strength.

President Bush delivers his annual State of the Union address Tuesday. His main themes are expected to be protecting the United States from terrorism and pulling the U.S. economy out of recession.

More than half of the S&P 500 companies -- 265 as of Friday -- have handed in fourth-quarter scorecards and, collectively, their earnings are down 19.40 percent from a year ago, according to First Call. Many have beaten lowered expectations.

"We have crossed the halfway point of the fourth-quarter earnings season and the backward-looking numbers still look good," J.P. Morgan market strategist Douglas Cliggott said in a note to clients. Cliggott remains bearish on stocks, though: "A choppy, uneven recovery seems to be more in tune with the economic realities of 2002."

Major stock gauges have slipped this year after surging off 3-year lows late in 2001, following the Sept. 11 assaults on the United States. Investors still expect the economy to snap out of its recession this year. But worries have surfaced that stock valuations have become too lofty and corporate earnings will show only modest improvement.

"The market is really kind of suspended here," said Stanley Nabi, managing director at Credit Suisse Asset Management, which manages about $269 billion worldwide. "Most of the earnings have been reported. Although there are signs earnings are stabilizing, there isn't enough conviction the recovery in earnings is going to be substantial enough to alter the current uncertain course of the market."

Tyco International Ltd., the most active stock on the New York Stock Exchange, lost $3 to $42. Tyco has fallen after saying last week it would split into four companies to improve its valuation. Investors, still bruised by the collapse of energy trader Enron Corp., worry accounting problems could plague other companies.

Affymetrix Inc. took a hit, along with other biotechnology shares, after consulting group Off Wall Street recommended investors bet shares of the genetic analysis firm will fall. Affymetrix sank $5.87 to $30.93, while the Nasdaq Biotechnology Index tumbled 2.73 percent.

The automobile sector got a boost after Morgan Stanley raised its investment rating on the sector. It also increased individual ratings on automakers General Motors and Ford Motor Co. , saying the stocks are cheap, given resilient car demand and lower inventories. Ford rose 55 cents to $15.06, while GM climbed $1.86 to $50.34.

Upbeat news came from Xerox Corp.. Xerox climbed $1.34 to $11.24 after the office equipment maker reported a surprise profit, before unusual items, for the 2001 fourth quarter. Xerox also said it was confident of a profit for the full year 2002 as well.

Palm Inc. shot higher after it introduced a wireless pocket computer organizer that can surf the Web and grab e-mail.It jumped 25 cents to $4.15.

Cisco Systems Inc, the world's No. 1 maker of gear that powers the Web, tacked on a 57-cent gain to end at $19.70.

American Express Co. fell 70 cents to $36.29, pressuring the Dow. The financial services giant posted lower quarterly profits, as a travel slump and the U.S. recession hurt its charge card, travel and money management units.

Other credit card companies slid, as Metris Cos Inc. was downgraded by analysts amid worries that the sub-prime lender's growing exposure to bad loans may signal an industrywide trend. Metris, which offers credit cards to customers with poor credit histories, fell $2.01 to $14.25.

Winners edged past losers by 8 to 7 on the New York Stock Exchange, and by 18 to 17 on the Nasdaq. More than 1.17 billion shares changed hands on the Big Board, and more than 1.46 billion on Nasdaq.

The Russell 2000 index rose 1.93 to 481.28. 

Overseas, Japan's Nikkei stock average rose 0.8 percent. In Europe, Germany's DAX index advanced 0.05 percent, Britain's FT-SE 100 rose 0.6 percent, and France's CAC-40 climbed 1.3 percent.

Reuters and the Associated Press contributed to this report.