US stocks closed mildly higher on Monday as investors digested another round of corporate earnings, while the dollar and US Treasuries yields rose after economic data further cemented expectations of a rate hike from the Federal Reserve in May.

After the first wave of bank earnings last week from names such as JP Morgan and Wells Fargo were better than anticipated, investors will now see results from the likes of Goldman Sachs, Morgan Stanley, Bank of America and a host of regional banks.

US stocks staged a modest rally late in the session to close near their highs of the day, but held within a tight trading range.

"The market is always sort of stuck in neutral around the early part of earnings season because nobody quite knows what to expect – is a company going to positively surprise or negatively surprise, we just don’t know," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York, New York.

"The other thing out there of course is the Fed, now the expectation is for a 25 basis-point hike in May. We are obviously very close to the end of Fed rate hikes, that doesn’t mean rates are coming down, that is why you are seeing the short end of the curve back up here in terms of yield."

The Dow Jones Industrial Average rose 0.3 percent to 33,987, the S&P 500 gained 0.3 percent to 4,151 and the Nasdaq Composite also rose 0.3 percent to 12,157..

In Europe, stocks ended just barely lower to snap a five-session streak of gains.

US yields climbed and the dollar strengthened, buoyed in part by economic data that showed a rebound in New York factory activity, while confidence among US single-family homebuilders improved for a fourth straight month in April. The data helped to fuel growing expectations the Fed will raise rates by 25 basis points at its May meeting.

While many see the Federal Reserve as closer to ending its rate hike cycle than other global central banks, economic data has indicated the economy is not near a recession yet, giving the Fed leeway to continue with rate hikes. (Reuters)