Stocks Edge Lower Ahead of Bell

Oil holds above $64 and IBM is downgraded at J.P. Morgan.
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Stocks were flat to lower ahead of the bell Monday as oil held above $64 a barrel and shares of

IBM

(IBM) - Get Report

were downgraded.

Index futures recently showed the

S&P 500

trading about 2 points below fair value, while the Nasdaq 100 was set for a 1-point decline. The 10-year Treasury bond was up 1/32 in price to yield 4.37%, 2 basis points above the two-year yield, while the dollar fell against the yen and rose against the euro.

February crude, which jumped more than 5% last week as hedge funds put fresh money to work in commodity markets, was recently up another penny to $64.22 a barrel. Natural gas fell 4 cents to $9.59 per million British thermal units.

Overseas markets are higher, with London's FTSE 100 recently up 0.3% to 5748 and Germany's Xetra DAX adding 0.1% to 5544. In Asia, Japan's Nikkei was unchanged at 16,428, while Hong Kong's Hang Seng gained 1.3% overnight to 15,547.

The

Dow Jones Industrial Average

starts the week at its best point since mid-2001 after 3% gains in

Hewlett-Packard

(HPQ) - Get Report

and IBM paced a 77-point jump on Friday. Monday morning, shares of IBM were downgraded to neutral at J.P. Morgan, which said the stock's 10% run through the back half of 2005 has left it reasonably valued.

Two potential corporate transactions were making news in the health sector Monday. According to the

Wall Street Journal,

,

Tyco

(TYC)

is studying a plan to spin off its healthcare and electronics units in an effort to simplify its sprawling conglomerate structure. The stripped-down surviving company would focus on security and fire-detection equipment, pumps and valves.

Boston Scientific

(BSX) - Get Report

, meanwhile, has added some detail of its $25 billion takeover offer for medical device company

Guidant

(GDT)

. Under a definitive offer outlined last night, Guidant said it has a deal to divest some of Guidant's coronary stent businesses to

Abbot Labs

(ABT) - Get Report

if its $72-a-share cash and stock offer goes through.

Johnson & Johnson

(JNJ) - Get Report

still has a $21.5 billion, or $64-a-share offer for Guidant on the table.