US stocks edged higher on Monday as technology shares bounced back after recent weakness and McDonald's posted strong monthly sales.

Technology stocks were led by Hewlett-Packard, which climbed 2.6 per cent to $14.16 on rumours that activist investor Carl Icahn is building a stake in the PC maker. The stock is down 44.5 per cent for the year and ranks as the Dow's worst performer. The S&P technology index was up 0.3 per cent.

Tech also was supported by Cisco Systems, which gained 2.4 per cent to $19.79 after the company presented its midterm growth strategy on Friday.

McDonald's gave the Dow a jolt, gaining 1.1 per cent to $89.41, as its November sales were stronger than expected and showed a bounce back from a decline in October.

There was little news Monday about the negotiations over the fiscal cliff. Concerns that lawmakers will not broker a deal have kept a lid on optimism in the equity market.

"There is a general sense that if a deal is struck, that we could have a further advance in the market at the end of this year as well as the first part of next year," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

A breakout to the upside on a cliff deal could take the S&P 500 back up to 1474, just off the 2012 high for the index, said Elliot Spar, Stifel Nicolaus option market strategist in Shrewsbury, New Jersey.

The benchmark S&P 500 index has yet to see a move greater than 0.5 per cent in either direction on any day in December, and hasn't moved more than 1 per cent either way in any session since November 23. However, the market has regained most of the losses incurred post-election as investors refocussed on the fiscal cliff.

President Barack Obama met with Republican House Speaker John Boehner on Sunday to negotiate a budget deal. A Boehner aide said talks are continuing.

The Dow Jones industrial average rose 14.75 points, or 0.11 per cent, to 13,169.88 at the close. The Standard & Poor's 500 Index inched up just 0.48 of a point, or 0.03 per cent, to 1418.55. The Nasdaq Composite Index advanced 8.92 points, or 0.30 per cent, to close at 2,986.96.

News out of Italy kept sentiment in check as Prime Minister Mario Monti said he would resign after the approval of the 2013 budget. The move added to uncertainty about progress being made to tackle the euro zone's debt problem and drove Italy's borrowing costs higher.

US-listed shares of Nexen jumped 13.8 per cent to $26.77 and the stock was the second-most actively traded on the New York Stock Exchange. On Friday, Canada approved a $15.1 billion bid by CNOOC Ltd for energy company Nexen.

The S&P materials index gained 0.7 per cent and led the S&P 500's sector index gains as shares of mining companies rose in sync with copper and gold prices. Shares of Freeport-McMoRan gained 1.1 per cent to $32.04.

Reuters