NEW YORK - Stocks retreated from historically lofty levels Monday as rising oil prices chilled investor enthusiasm for strong earnings reports and new takeover activity. The Dow Jones industrials came within 17 points of 13,000 before pulling back.
The blue chip index hit a new trading high of 12,983.92 after British bank Barclays PLC said it will acquire Dutch bank ABN Amro NV for $91.16 billion, and British drugmaker AstraZeneca PLC said it will buy U.S. drugmaker MedImmune Inc. for $15.6 billion. Though the U.S. economy has been slowing and the dollar has been weakening, global takeover activity remains robust, giving investors reason to believe U.S. companies will keep finding ways to pull in profits.
But the market was still vulnerable to a downturn. Corporate growth is slower than it has been in years, though, and investors grew cautious as they awaited more clues about the direction of the economy. And so Monday, a spike in crude oil prices above $65 a barrel reignited inflation worries, and reminded Wall Street that other economic obstacles exist as well, such as a weak dollar and slow housing market.
Analysts said investors were trading deliberately - and avoided succumbing to pre-13,000 euphoria. Although the Dow passed 12,000 only last October, there appeared to be little of the kind of frenzy that drove the market's major indexes to record after record during the dot-com boom.
"Anytime you approach a new milestone - especially 13,000, which is a psychological barrier - it's not going to happen overnight. It's going to take some time," said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners Inc. "The market has gone up on earnings, and the earnings story has already been factored in .... There are a lot of negative things out there that the market has been ignoring."
According to preliminary calculations, the Dow Jones industrial average fell 42.58, or 0.33 percent, to 12.919.40. On Friday, the Dow rose more than 150 points to 12,961.98, posting its seventh straight gain and third straight record close. The blue chip index appears to have recovered from its stumble in late February, and has hit 34 record closes since the beginning of October last year.
The broader Standard & Poor's 500 index fell 3.42, or 0.23 percent, to 1,480.93. The index is about 3 percent away from its record close of 1,527.46, reached in March 2000.
The technology-dominated Nasdaq composite index lost 2.72, or 0.11 percent, to 2,523.67. It stands at about half its record closing level of 5,048.62, also reached in March 2000.
Bonds rose as stocks fell. The yield on the benchmark 10-year Treasury note fell to 4.65 percent from 4.67 percent late Friday.
Crude oil prices climbed $1.65 to $65.76 a barrel on the New York Mercantile Exchange on growing concerns that oil supplies could be disrupted as violence escalates in Nigeria.
Gold prices slipped. The dollar rose slightly against the euro and British pound, but is still trading at historically low levels versus those currencies.
The dollar's recent drop is not necessarily bad for the U.S. economy; it makes U.S. goods comparatively cheaper and therefore more attractive to foreign importers. However, a weaker dollar reduces its allure as an investment currency, especially as interest rates rise in other countries.
Corporate profits have been cooling after more than three years of double-digit growth, but nonetheless have been generally stronger than expected so far this earnings season. Still, some tech companies have issued disappointing results.
Earnings reports Monday from companies including Hasbro Inc., Novartis SA and Kimberly-Clark Corp. came in strong.
Hasbro rose $2.33, or 7.7 percent, to $32.54, while U.S. shares of Novartis fell 39 cents to $57.44.
Kimberly-Clark fell 84 cents to $71.10.
Merger-and-acquisition activity continues to surge. Barclays' buy of ABN Amro would be the world's biggest bank deal, and will lead to ABN Amro selling its U.S. unit, LaSalle Bank, to Bank of America Corp. for $21 billion. Bank of America fell 53 cents to $50.51.
MedImmune, AstraZeneca's takeover target, rose $8.56, or 17.8 percent, to $56.57. AstraZeneca fell $3.13, or 5.3 percent, to $55.91.
Later this week, investors will face six of the Dow component companies reporting first-quarter financial results, as well as data on the housing market, durable goods, gross domestic product and consumer confidence.
"We still have quite a bit of earnings news this week. Generally, that's going to be positive. As long as the economic data falls in line, we should still continue to push prices higher," said Jack Ablin, chief investment officer at Harris Private Bank.
Advancing issues narrowly outnumbered decliners on the New York Stock Exchange, where volume came to 1.44 billion shares.
The Russell 2000 index of smaller companies fell 1.31, or 0.16 percent, to 827.55.
Overseas, China's Shanghai Composite Index rose 3.5 percent and Japan's Nikkei stock average gained 0.02 percent. Britain's FTSE 100 dropped 0.11 percent, Germany's DAX index slipped 0.09 percent, and France's CAC-40 lost 0.36 percent.