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A warning from hotel operator Marriott that hurt hotel and other consumer shares during the regular session was followed after the bell by oilfield services company Halliburton Co's (HAL.N) announcement that first-quarter earnings could be trimmed.

"A good quarter is baked in right now, but I think there are going to be a lot of surprises, the latest one from Halliburton," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

He said among the main issues facing the next quarter's earnings are geopolitical issues emanating from northern Africa and the Middle East, the aftermath of Japan's natural disasters and nuclear crisis, and rising input costs.

"If companies can't pass along the price increases, we're going to see some problems and that's where earnings are going to start to have an issue," Saluzzi said. "Unless they pass it on and then we have inflation ... so pick your poison."

Marriott International (MAR.N) shares fell 6.3 percent to $35.30 during the regular session, while Halliburton dropped 1.9 percent to $47 after the bell.

Stocks spent most of the day in positive territory, with the S&P 500 hitting a session high near 1,320 for a second straight session, driven by strength in the telecommunications sector and consumer spending data.

The Dow Jones industrial average .DJI lost 22.71 points, or 0.19 percent, to 12,197.88. The Standard & Poor's 500 Index .SPX fell 3.61 points, or 0.27 percent, to 1,310.19. The Nasdaq Composite Index .IXIC fell 12.38 points, or 0.45 percent, to 2,730.68.

Analysts at Instinet in New York said a battle over the territory just beyond the day's highs on the S&P 500 was likely to continue in the upcoming sessions.

"Over the very near term ... the odds point toward another short-term firefight in the 1,320-1,330 area," Instinet's note said.

The S&P telecom index .GSPL rose 1.4 percent after a brokerage upgraded a number of companies, including Dow components AT&T Inc (T.N) and Verizon Communications Inc (VZ.N).

AT&T rose 1.8 percent to $29.36 and Verizon gained 1.2 percent to $37.75, curbing losses in the blue-chip index.

About 5.9 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq -- the lowest volume in 2011. Last Tuesday's 6.54 billion was the lowest until Monday.

"From the point of view of a purchaser, to make a commitment here, you have to think margins will keep expanding and the Fed will stay easing," said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto.

He said light volumes reflect investors' uncertainty on those issues.

EBay said on Monday it offered GSI shareholders $29.25 per share, a 50.9 percent premium over its closing price on Friday. Shares rose by the same amount in Monday's Nasdaq trading. EBay

shares were down 3 percent.

GSI owns Web businesses such as Rue La La, which offers one-day-only deals to its members, and ShopRunner, a members-only online shopping service that offers free shipping. GSI also provides technology, payment processing and customer care services for e-commerce sites.

In a statement, EBay Chief Executive John Donahoe said the deal would help the company connect more buyers and sellers.

EBay said the acquisition, expected to close in the third quarter of 2011, would have little effect on its fiscal 2011 adjusted earnings forecast, and would add to 2012 earnings. EBay said the deal would hurt 2011 net income by 30 cents to 34 cents per share.

As part of the deal, EBay will sell off GSI's licensed sports merchandise business and 70 percent of ShopRunner and Rue La La, which will all become part of a new holding company run by GSI's founder and Chief Executive Michael Rubin.

EBay will lend Rubin's new company $467 million. Including the loan, eBay said the deal was worth $2.4 billion.

EBay said those business were not important to its long term growth strategy but it will keep a 30 percent stake in both Rue La La and Shop Runner.

GSI has until May 6 to solicit bids from other parties during the so-called "go shop" period.

EBay has pointed to its PayPal payments processing unit as its prime growth driver in recent years.

But it is also trying to spark growth at its more familiar marketplaces unit, a high-margin business that connects online buyers and sellers.

(Reporting by Phil Wahba; Editing by Derek Caney)

The Commerce Department said spending rose 0.7 percent after an upwardly revised 0.3 percent gain in January.

Economists polled by Reuters had expected spending, which accounts for about 70 percent of U.S. economic activity, to advance 0.6 percent in February after a previously reported 0.2 percent rise.

Spending adjusted for inflation increased 0.3 percent last month after being flat the prior month. After increasing at its fastest clip in four years in the final three months of 2010, consumer spending is expected to slow in the first quarter, with rising energy and food prices stealing from spending on other goods and services.

Spending grew at a 4.0 percent annual rate in the fourth quarter, helping to lift overall economic growth to a 3.1 percent pace during the quarter from 2.6 percent in the July-September period.

High food and energy prices pushed up overall inflation last month. The Commerce Department said the personal consumption expenditures price (PCE) index rose 0.4 percent, the fastest since June 2009, after gaining 0.3 percent in January

The Federal Reserve's preferred measure of consumer inflation -- the core PCE index excluding food and energy -- increased 0.2 percent after rising by the same margin in January. In the 12 months through January, the core PCE index rose 0.9 percent, the fastest rise in four months, after rising 0.8 percent in January.

The Federal Reserve so far views the high food and energy prices as transitory, but Chairman Ben Bernanke said he would act to ensure an inflationary psychology does not take root.

Incomes rose 0.3 percent last month after rising 1.2 percent in January. That compared with economists' expectations for a 0.4 percent gain.

With consumption outpacing the growth in incomes, savings fell to $676.7 billion from $710.5 billion in January. (Reporting by Lucia Mutikani, Editing by Andrea Ricci)