Wall Street pared its losses Monday, with stocks trading mixed after President Barack Obama made a fresh appeal to Congress to quickly pass a massive package to revive the economy.

As the economy deteriorates, investors are once again looking to Washington for answers, and they're worried that government gridlock will hold up a stimulus package for individuals and businesses.

Obama said Monday that "very modest differences" over the stimulus plan should not delay its passage.

The stimulus package that passed the House last week now goes to the Senate, where Republican leader Mitch McConnell said Sunday the bill backed by President Barack Obama and congressional Democrats could be defeated if it's not stripped of what Republicans deem unnecessary spending.

"I think it's got legislative paralysis," David Waddell, senior investment strategist and chief executive of Waddell & Associates said of the market. "Everything occurring right now is predicated upon what the current conversation is in Washington, which makes it a very difficult market to evaluate."

In early afternoon trading, the Dow fell 41.41, or 0.52 percent, to 7,959.45, after earlier falling as much as 121 points. The Standard & Poor's 500 index rose 2.03, or 0.25 percent, to 827.91, and the Nasdaq rose 16.63, or 1.13 percent, to 1,493.05.

Investors are also concerned about the nation's ailing banks.

Reports that Treasury Secretary Timothy Geithner is expected to outline a bank rescue plan next week have lifted the mood among investors, said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners Inc.

"That news gave the market a little bit of a bounce here," Cardillo said. "The market is hoping for some resolution to the banking crisis."

Stocks fell in the early going after the Institute for Supply Management said manufacturing activity rose during January from a record low, but still fell for the 12th straight month as the recession spread around the world. The trade group of purchasing executives said its widely-followed survey of manufacturing rose to 35.6 percent in January from an upwardly revised 32.9 in December. That was well above the reading of 32.6 economists had expected.

"The manufacturing report was a little bit better than the market forecast, but it was nothing to write home about," said Alan Skrainka, chief market strategist at Edward Jones.

Other readings Monday on consumer and construction spending indicated that the economy continues to deteriorate.

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