By Angela Moon
NEW YORK (Reuters) - Investors brushed off Europe's election results, as the S&P 500 rebounded from early losses to end nearly unchanged on Monday, despite the uncertainty surrounding the euro zone's ability to tackle its debt crisis.
U.S. financial stocks, normally highly sensitive to events that could unsettle the euro zone's fiscal stability, were not only the biggest gainers, but had the heaviest volume.
The S&P 500 financial sector index .GSPF rose 0.7 percent. Bank of America (BAC.N) shares shot up 2.8 percent to $7.96 and Goldman Sachs (GS.N) gained 1 percent to $110.04.
"One positive thing we are seeing out of the elections and we are hearing from the ECB chairman is a focus on growth and that austerity measures alone are not going to get them out of this crisis," said Sean Lynch, global investment strategist for Wells Fargo Private Bank in Omaha, Nebraska.
"So if there are more growth-oriented measures, that could help the banking system and could be a positive for the economy as well."
Analysts pointed to a potential government bailout for troubled Spanish bank Bankia (BKIA.MC) as a boost for the sector.
The Dow Jones industrial average (.DJI) slipped 29.74 points, or 0.23 percent, to 13,008.53 at the close. But the Standard & Poor's 500 Index (.SPX) inched up just 0.48 of a point, or 0.04 percent, to 1,369.58. The Nasdaq Composite Index (.IXIC) added 1.42 points, or 0.05 percent, to 2,957.76.
The election results from Europe initially roiled futures markets on Sunday night, but markets were able to rebound. Greeks voted to cast out ruling parties in elections on Sunday, dealing a blow to the fragile political consensus that has kept Europe's currency bloc intact through more than two years of crisis.
In France, Socialist Francois Hollande won the presidency over incumbent Nicolas Sarkozy, raising pressure on Germany to pursue a more growth-oriented approach to the regional crisis.
In the biotech sector, Vertex Pharmaceuticals Inc (VRTX.O) soared 55.4 percent to $58.12 after data from a mid-stage study showed the company's cystic fibrosis drug Kalydeco, when combined with its experimental treatment for the disease, led to significant improvement in lung function. The NYSEArca biotech index (.BTK) climbed 3.4 percent.
In addition to the gains in the U.S. financial sector, homebuilders' shares also advanced in Monday's session. The Philadelphia Stock Exchange index of housing-related shares (.HGX) rose 0.9 percent.
As the earnings season draws to a close, 420 S&P 500 companies had reported results as of Monday morning, with 67.6 percent exceeding estimates, according to Thomson Reuters data. In contrast, more than 80 percent had beaten expectations at the start of the season.
Cognizant Technologies Solutions Corp (CTSH.O) slid 19.2 percent to $56.30 as the biggest drag on the S&P 500, after cutting its profit and revenue outlooks.
PepsiCo (PEP.N) climbed 1.1 percent to $66.62 after Morgan Stanley upgraded its view on the U.S. beverage industry to "attractive" and raised PepsiCo Inc (PEP.N) to "overweight" from "equal weight.
Volume was 6.28 billion shares on the New York Stock Exchange, the Nasdaq and the NYSE Amex, below the daily average of around 6.76 billion.
On the New York Stock Exchange, advancers outnumbered decliners by a ratio of about 8 to 7. On the Nasdaq, nearly 14 stocks rose for every 11 that fell.
(Reporting by Angela Moon; Editing by Jan Paschal)