NEW YORK (Reuters) - Stocks closed little changed on Monday, pausing after hitting record highs last week, but strength in healthcare issues helped to keep declines in check.

The S&P 500 healthcare sector climbed 0.7 percent and was the day's best performer.

Shares of Theravance jumped 17.9 percent to $41.20 after Irish drugmaker Elan agreed to a $1 billion deal to buy 21 percent of the royalties that Theravance receives from GlaxoSmithKline for its respiratory drugs.

The day's flat close followed a third straight week of gains on the major indexes, with both the Dow and S&P 500 setting record closing highs last week. The S&P 500 remains up 14.5 percent for the year so far.

While some analysts argue the long-term trend is still higher, many see momentum waning in the near term in the absence of positive catalysts. Volume has been lighter than average, and volatility has been low in recent days.

"Intraday volatility has essentially been nonexistent. I think it means people are really sitting on the sidelines right now seeing which way it's going to go," said Uri Landesman, president of Platinum Partners in New York. He expects the rally to top out in the next two weeks.

The CBOE Volatility index ended down 0.3 percent.

The Dow Jones industrial average ended down 26.81 points, or 0.18 percent, at 15,091.68. The Standard & Poor's 500 Index was up 0.07 point at 1,633.77. The Nasdaq Composite Index was up 2.21 points, or 0.06 percent, at 3,438.79.

Among the day's declining issues, Yum Brands Inc fell 2 percent to $68.92. After the market closed on Friday, the fast food chain operator posted a steep decline in Chinese April sales.

Other big healthcare group gainers included Pfizer , up 2.3 percent at $29.37; Gilead , up 3.1 percent at $54.47; and Biogen Idec , up 4.5 percent at $222.74.

Helping to limit the market's decline, retail sales rose 0.1 percent in April, better than the 0.3 percent drop that had been expected and returning to growth following a decline in March. [ID:nCATDGE91U] Excluding autos, gasoline and building materials, core sales rose 0.5 percent. Retail sales account for about 30 percent of U.S. consumer spending.

Investors are at odds over whether positive economic data can help the market rise further, or whether it will spell the end of the Federal Reserve's monetary stimulus, which could derail the rally, said Joseph Tanious, global market strategist at J.P. Morgan Funds.

Other data showed business inventories were unchanged in March for a second straight month, versus expectations of a 0.3 percent rise, suggesting restocking could help second-quarter economic growth.

Earnings have been mostly better than expected. With 90 percent of the S&P 500 having reported, 67.2 percent of companies have topped earnings expectations, according to Thomson Reuters data, even with the average over the past four quarters. Only 46.9 percent have beaten revenue expectations, below the 52 percent average over the past four quarters.

U.S.-listed shares of Perion Network surged 10.6 percent to $13.94 after the Israeli consumer Internet company posted first-quarter earnings.

Volume was roughly 5.3 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, well below the average daily closing volume of about 6.4 billion this year.

Declines outpaced advances on the NYSE by nearly 3 to 2 and the Nasdaq by a ratio of about 13 to 11.

(Additional reporting by Leah Schnurr; Editing by Nick Zieminski and Dan Grebler)

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