Mergers Fail to Spark Stocks

Blue chips close lower despite several big takeover deals.
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Updated from 4:09 p.m. EST

Even with a slew of corporate mergers and a continuing downtrend in oil prices, traders didn't show a great deal of buying interest Monday, and blue chips closed in negative territory.

The

Dow Jones Industrial Average

fell 26.02 points, or 0.21%, to 12,316.54, having vacillated around the unchanged mark for most of the session. The

S&P 500

was off 0.70 point, or 0.05%, at 1400.50, and the

Nasdaq Composite

was up 6.86 points, or 0.28%, to 2452.72.

The Dow was pressured by a loss of 2.2% in component

General Motors

(GM) - Get Report

. Meanwhile,

Marvell Technology

(MRVL) - Get Report

supported the Nasdaq with a 6.4% rise.

"Thursday's highs now represent key resistance," said Ken Tower, chief market strategist with CyberTrader. "That's because the rally lost steam on Thursday afternoon and one has to wonder if a correction is developing. The market appears headed to test that high."

About 2.56 billion shares changed hands on the

New York Stock Exchange

, and volume on the Nasdaq was roughly 1.72 billion shares. Advancers were even with decliners.

"The market is back up to levels that indicate a significant overbought condition," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "We could, and should, start seeing a consolidation here as we work off the overbought condition."

By sector, real estate stocks were the big winners of the session. The BBG REIT Index rose 3.2%, and the Dow Jones Composite REIT Index jumped 3%. Transportation stocks were among the hardest hit, with the Nasdaq Transportation Index losing 0.8%.

Equities had been considerably weaker just after the open but improved as the Conference Board said its measure of leading economic indicators rose 0.2% in October. While the increase matched expectations, September's figure was revised to a gain of 0.4%.

Both figures suggest that the economy isn't suffering as much as expected from the slowdown in housing.

The latest round of dealmaking saw a number of multibillion-dollar acquisitions and merger bids, including a nearly $26 billion takeover of

Phelps Dodge

(PD) - Get Report

by fellow miner

Freeport-McMoRan

(FCX) - Get Report

.

Phelps Dodge surged $25.45, or 26.8%, to close at $120.47, and Freeport-McMoRan lost $1.77, or 3.1%, to $55.63.

Elsewhere, the London Stock Exchange rejected a $5.1 billion offer from the

Nasdaq Stock Market

I:IXIC

to buy the rest of the company. The Nasdaq already owned 25% of the London market and has purchased 7 million more shares. Shares of Nasdaq added $1.14, or 3.1%, to finish at $37.71.

On the financial services side,

Bank of America

(BAC) - Get Report

said it will pay $3.3 billion for U.S. Trust, and in the real estate world,

Equity Office

(EOP)

will be taken over by a unit of Blackstone Group. Bank of America tacked on 0.1% at $54.90, and Equity Office was higher by 7.7% at $48.15.

The session's overall sluggishness marked a reversal from a week in which the Dow closed at repeated record highs and went out at 12,342.56. The Dow advanced 1.9% during the last five sessions, and the S&P 500 rose 1.4%. Meanwhile, the Nasdaq was higher by 2.3%.

This week, Wall Street will have only three full trading sessions, as U.S. markets are closed Thursday for the Thanksgiving holiday and will shut down at 1 p.m. EST on Friday.

Underpinning last week's gains in the stock market were lower oil prices, and the newly benchmarked January crude futures contract was continuing that trend, falling 17 cents to finish at $58.80 on the Nymex. Other energy prices were down as well.

Precious metals also were weaker. Gold eased by 40 cents to close at $622.10 an ounce and silver lost 6 cents to $12.74 an ounce, having touched a session high of $13 an ounce earlier.

The benchmark 10-year note was up 2/32 in price to yield 4.59%, and the 30-year bond was up 5/32 in price, yielding 4.67%.

Among earnings reports, home-improvement retailer

Lowe's

(LOW) - Get Report

posted third-quarter earnings of $716 million, or 46 cents a share, up from the year-ago $646 million, or 40 cents a share. Results beat estimates by 3 cents.

However, Lowe's said revenue rose to only $11.21 billion from $10.59 billion a year earlier, missing the Thomson First Call target for sales of $11.46 billion. The company also offered guidance below estimates. Still, shares shook off early weakness and finished the session up 10 cents, or 0.3%, to $30.58.

Overseas, European markets were higher. London's FTSE 100 gained 0.2% to 6205, and Frankfurt's Xetra DAX rose 0.6% to 6452. Asia's markets lost ground overnight. The Nikkei dropped 2.3% at 15,725, and the Hang Seng fell 1.2% to 18,954.