Defensive names rallied in an otherwise flat day for Wall Street on Monday as investors paused after recent gains and looked ahead to the Federal Reserve's monetary policy statement.

Investors will eye Tuesday's statement from the U.S. central bank's Federal Open Market Committee to see whether the Fed will cool down expectations of more easing of monetary policy, which might make it difficult to extend the rally.

Markets were recently rattled after Fed Chairman Ben Bernanke stopped short of giving a strong signal of more stimulus during congressional testimony.

Investors got a shock when China reported its largest trade deficit in at least a decade.

It isn't surprising that we would consolidate, given the question marks about China and how far stocks have come, said Jonathan Lewis, chief investment officer of Samson Capital Advisors in New York. Risk assets are the focal point in a see-saw, with signs of domestic growth on one side and overseas events on the other.

Utilities <.GSPU>, consumer staples <.GSPS> and telecom <.GSPL> were the day's top three sectors, with the S&P utilities index gaining 1.1 percent. Late Friday, Constellation Energy Group Inc agreed to pay $235 million to settle a probe of its wholesale power trading, clearing the way for its $7.9 billion sale to rival utility Exelon Corp .

Constellation rose 3 percent to $37.23 while Exelon gained 2.3 percent to $39.81.

The Dow Jones industrial average <.DJI> added 37.69 points, or 0.29 percent, to 12,959.71 at the close. The Standard & Poor's 500 Index <.SPX> inched up just 0.22 of a point, or 0.02 percent, to 1,371.09. But the Nasdaq Composite Index <.IXIC> dipped 4.68 points, or 0.16 percent, to close at 2,983.66.

With the day's tiny gain, the S&P 500 has closed in positive territory for the past four sessions. The benchmark index is close to nearly a four-year high set two weeks ago and faces strong technical resistance. The CBOE Volatility Index, or VIX, <.VIX> closed at 15.64, its lowest level since May 2011.

Equities had traded modestly lower early in the session as weak data from China cast some doubts over the pace of global economic expansion. Still, gains in groups less tied to growth were enough to offset weakness in cyclical sectors.

China's trade balance plunged $31.5 billion into the red in February as imports swamped exports.

The data cast some doubt on global economic growth prospects after Friday's U.S. payrolls report pointed to an improving domestic economy and pushed equities to their fourth straight weekly gain.

Materials <.GSPM>, energy <.GSPE> and financial <.GSPF> were the day's weakest groups, with energy pressured by a drop in crude oil prices.

Banks declined as a report from the Fed looms on the capital adequacy of the largest U.S. lenders. The KBW bank index <.BKX> fell 0.7 percent, with JPMorgan Chase down 1.2 percent at $40.54 and SunTrust Banks off 2.5 percent at $21.88.

Tidewater Inc's shares slumped 5.4 percent to $55.42 after the offshore vessels provider said Sonatide, its partnership with Angola's state oil company, will not take up new charters or extend existing ones in the country until the two parties resolve ongoing joint venture talks.

Youku Inc surged 27.4 percent to $31.85 after China's largest online video company said it will buy second-ranked Tudou Holdings Ltd in an all-stock deal valued at more than $1 billion. Tudou shot up 156.5 percent to $39.48.

About 52 percent of stocks traded on the New York Stock Exchange closed in positive territory on Monday, while on the Nasdaq, 54 percent of stocks closed lower.

Volume was light, with about 5.15 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well below last year's daily average of 7.84 billion.

(Editing by Jan Paschal)