By Angela Moon
NEW YORK (Reuters) - U.S. stocks edged higher in a volatile session on Monday after Standard & Poor's raised its credit outlook for the United States, but uncertainty about when or if the Federal Reserve might reduce its stimulus efforts limited gains.
Wall Street seesawed between modest gains and losses in the morning session. Technology stocks were among the day's top gainers with Apple and Facebook supporting the Nasdaq.
McDonald's Corp was among the biggest gainers on the blue chip Dow after it said sales at its established restaurants around the world rose in May, sending its shares up 1.7 percent at $99.92.
S&P raised its U.S. sovereign credit outlook to "stable" from "negative", and put the likelihood of a near-term downgrade of the rating at "less than one in three.
The agency had downgraded the United States to "AA+" from the top-rated "AAA" in the summer of 2011.
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"It's not a terrible surprise given that the deficit is coming down, and the Fed is still monetizing a fair amount here, but it points to the direction that the fiscal stability is improving for now," said James Dailey, senior portfolio manager of the Team Asset Strategy Fund in Harrisburg, Pennsylvania.
"But fueling the volatility again here is the Fed and trying to figure out what this all means."
While last week's employment report eased investor jitters that the Federal Reserve could cool the pace of its bond buying in the very near term, some investors are preparing for the Fed to reduce its quantitative easing by the end of the year.
A senior Fed official said on Monday that low inflation means the central bank can stick to aggressive bond buying if warranted. St. Louis Fed President James Bullard said "surprisingly low inflation readings may mean the (Fed's policy) Committee can maintain its aggressive program over a longer time frame.
The Fed's loose monetary policy has helped push the S&P 500 up over 15 percent for 2013 so far. The prospect of the Fed beginning to scale back has raised questions about stocks' future performance.
The Dow Jones industrial average was up 14.53 points, or 0.10 percent, at 15,262.65. The Standard & Poor's 500 Index was up 2.63 points, or 0.16 percent, at 1,646.01. The Nasdaq Composite Index was up 12.15 points, or 0.35 percent, at 3,481.37.
Apple Chief Executive Tim Cook will take the stage at the company's annual developers' conference, this time to reveal what is expected to be a more modern-looking mobile operating system. Its shares were up 1.5 percent at $448.25.
Facebook Inc shares rose more than 5 percent to $24.50 after Stifel Nicolaus raised its rating on the social networking company's stock.
Shares of Booz Allen fell after an ex-CIA employee, working as a contractor at the U.S. National Security Agency, said he was the source who leaked details of a top secret U.S. surveillance program. Edward Snowden said he had been working at the NSA as an employee of contractor Booz Allen, whose shares were down 3.7 percent at $17.34.
AstraZeneca is buying U.S. respiratory drug specialist Pearl Therapeutics for up to $1.15 billion as Britain's second-biggest drugmaker steps up a drive to rebuild its product pipeline via deal-making.
(Reporting by Angela Moon; Editing by Kenneth Barry)