By Anora Mahmudova, MarketWatch

NEW YORK (MarketWatch) -- The U.S. stock market opened modestly higher on Monday, but struggled to recoup some of the deep losses from last week.

Indexes fell sharply last week after weak data from China and selloffs in emerging-markets currencies triggered a global flight from equities.

The S&P 500 (SPX) was a point higher at 1,791.08 shortly after the opening bell. The Dow Jones Industrial Average (DJI) began the day 29 points, or 0.2%, higher at 15,910.32.

The Nasdaq Composite (RIXF) gave up opening gains and was 5 points, or 0.1%, lower at 4,122.11.

Upbeat results from Caterpillar Inc. lifted the Dow. Shares of Caterpillar Inc. (CAT), seen as an economic bellwether for global activity, rose 6.6%. The company posted fourth-quarter earnings per share of $1.54 and a 44% profit gain, while sales fell 10%. Caterpillar said it expects a $1.7 billion buyback in the first quarter of this year.

New-home sales for December are the only data point for investors. The final month of the year is expected to show a decline in demand, mostly due to cold weather. For the year, sales are likely to end nearly 20% higher in 2013 compared with 2012. The data are due at 10 a.m. Eastern Time. Read: How much gas in economy's tank? Let's see

Homebuilders shrugged off rating cuts from Barclays. KB Home was downgraded to underweight from equalweight and Toll Brothers' rating was cut to equal weight from overweight.

Shares in KB Home (KBH) edged 0.3% higher, while Toll Brothers' (TOL) shares rose 1.2%. The S&P 500 homebuilder sub index rallied 1.6%.

Shares in Google Inc (GOOG) fell 0.6% after the company said it bought artificial-intelligence company DeepMind. Samsung Electronics Co. and Google also signed a long-term cross-licensing deal on technology patents.

Investors will also focus on the Federal Reserve this week as the central bank will take center stage on Wednesday. Most observers expect the central bank to cut its bond-buying again, by about $10 million to $65 billion a month. Expectations of Fed tapering are among the reasons Wall Street suffered its worst weekly performance in more than a year last week.

In other markets, European stocks were lower on Monday, while Asia followed up those Wall Street losses with a 2.5% drop for the Nikkei 225 Index and a 2% loss for the Hang Seng Index . Gold edged lower and natural-gas prices(NGG14) fell.

More must-reads from MarketWatch:

Movers: Apple, Google in focus; Caterpillar rises on earnings

Stock investors trash market darlings, face Apple, Fed

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