The Nasdaq and the S&P 500 fell on Monday as concerns about the strength of an economic recovery kept pressure on stocks and commodity prices.

But the Dow industrials edged higher as some investors snapped up defensive stocks amid continued concern over the economy following last week's non-farm payrolls report.

Investors were also looking ahead to the start of second quarter earnings season on Wednesday for an indication of how corporations are weathering the economic downturn.

American Express Co was among the Dow's top percentage gainers, climbing 5.2 percent to $23.43 after Stifel Nicolaus raised its rating on the company's stock to hold, saying it was the least exposed to new rules on the credit card sector.

The weakness of June's employment report, which was released last Thursday before the market shut for the long holiday weekend, is still casting a pall over Wall Street, said Robert Auer, senior portfolio manager of SBAuer Funds in Indianapolis.

The market is now wanting to see what the earnings season has in store, Auer said. And it's not just what the numbers are. It's going to be what the companies say that's going to be more important.

The Dow Jones industrial average <.DJI> gained 12.85 points, or 0.16 percent, to 8,293.59. The Standard & Poor's 500 Index <.SPX> dropped 3.12 points, or 0.35 percent, to 893.30. The Nasdaq Composite Index <.IXIC> lost 18.59 points, or 1.03 percent, to 1,777.91.

Among the heaviest weights on the Nasdaq was iPhone and iPod maker Apple Inc. , down 1.8 percent at $137.53.

Earlier on Monday, the U.S. Department of Justice began a review of whether telephone companies such as AT&T and Verizon Communications have abused their market power in recent years, according to The Wall Street Journal. The Justice Department's review could explore if carriers' exclusive deals on popular phones hurt smaller rivals, the newspaper said.

While data released earlier on Monday by the Institute for Supply Management showed the U.S. service sector contracted in June at a slower pace than expected, the market's sentiment was still colored by last week's much worse-than-expected jobs report.

On Thursday, the U.S. Labor Department reported a decline of 467,000 in nonfarm payrolls, nearly 100,000 more than expected. The U.S. stock market was shut on Friday for the long Independence Day holiday weekend.

August crude futures touched a five-week low, falling 4.21 percent to $63.91 per barrel on Monday and sending shares of Marathon Oil Corp down 2.2 percent to $28.35. Holly Corp shares slid 4 percent to $17.87.

(Editing by Jan Paschal)

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