Updated from 4:40 p.m. EST

Stocks posted modest gains Monday as the bullish implications of another fall in oil prices were offset by selling in energy shares, and profit-takers emerged after three weeks of gains.

The

Dow Jones Industrial Average

closed up 11.23 points, or 0.11%, to 10,550.24, while the

S&P 500

lost 0.36 point, or 0.03%, to 1183.81, having closed at a three-year high last week. The

Nasdaq

rose 8.75 points, or 0.42%, to 2094.09, the closest it has been to the 2100 level since mid-February. The 10-year Treasury note lost 3/32 in price to yield 4.19%, while the dollar was lower against the yen and higher against the euro.

Trading volume was similar to that of recent sessions. About 1.4 billion shares traded on the

NYSE

, where advancers outpaced decliners by a small margin. On the Nasdaq, about 1.8 billion shares changed hands, with advancing and declining shares about equal.

"The market looks like it's in great shape now," said Ken Tower, chief market strategist with CyberTrader. "The S&P is leading the market, and the S&P small-cap index has been screaming higher for a long time now. That's where the leadership is, and my advice to investors here is to find the leadership and enjoy the ride.

"The main issues for the market now are growth and inflation, and inflation has been amazingly tame so far in this recovery," Tower added.

Oil's slide continued, pushing the price to a two-month low and leaving it about 16% beneath its all-time high hit Oct. 25. Nymex crude for December delivery fell 52 cents to $46.87 in floor trading. It had been down more than $2 at one point in the session. The decline sent oil company shares lower, with the

Amex Oil Services HOLDR

(OIH) - Get Report

falling 3.4%.

Among stocks,

Merck

(MRK) - Get Report

rose Monday despite reports over the weekend that its executives had evidence as early as 2000 that its Vioxx analgesic posed a risk to heart patients.

The New York Times

reported that the drug company decided against a more focused investigation of Vioxx in 2000, ostensibly on the grounds it would be impossible to isolate the drug's cardiovascular impact. Merck, which withdrew Vioxx from the market Sept. 30, says it acted properly.

Still, the stock rose 64 cents, or 2.4%, to $27.09.

Elsewhere,

Intel's

(INTC) - Get Report

investment rating was cut to underperform Monday by brokerage First Albany, which forecast lackluster demand for the next year and a half. The firm cut its price target to $18 from $24 and voiced some doubt about the vision of incoming CEO Paul Otellini. Intel rose 8 cents, or 0.3%, to $23.77

Home-supply chain

Lowe's

(LOW) - Get Report

said third-quarter earnings rose 15.5% to $522 million, or 66 cents a share, a penny better than estimates. Sales rose 16.2% from a year ago to $9.1 billion, compared with the Thomson First Call estimate of $8.99 billion. Lowe's fell $1, or 1.7%, to $59.25.

Other retailers reporting earnings this week include

Wal-Mart

(WMT) - Get Report

,

Home Depot

(HD) - Get Report

and

J.C. Penney

(JCP) - Get Report

.

Overstock

(OSTK) - Get Report

outlined plans for separate follow-on stock and note offerings that are intended to raise about $137 million of new capital. The online retailer plans to sell 1 million common shares and $75 million of convertible notes, according to a filing with the

Securities and Exchange Commission

. The money will be used for general corporate purposes.

MarketWatch.com

(MKTW)

entered a definitive agreement to be acquired by

Dow Jones

(DJ)

for $18 a share, or about $519 million. Dow Jones prevailed in an auction for the online financial news provider that had also included

Yahoo!

(YHOO)

,

New York Times

(NYT) - Get Report

and

Viacom

(VIAB) - Get Report

.

MarketWatch rose $1.33, or 7.9%, to $18.12.

In other news, Secretary of State Colin Powell announced he is stepping down. The move was somewhat expected after his sometimes factious relationship with the president and other top advisers. Three other cabinet members also plan to leave the administration.

Overseas markets closed mixed, with London's FTSE 100 up 0.2% to 4803 and Germany's Xetra DAX shedding 0.2% to 4134. In Asia, Japan's Nikkei rose 1.9% overnight to 11,228, while Hong Kong's Hang Seng added 1.1% to 13,932.