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Stocks in Neutral Before Earnings

Merger deals make headlines, while reports from Alcoa and others are on the horizon.

Updated from 4:23 p.m. EDT

Stocks in New York struggled Monday and ended little changed as traders turned cautious at the start of the first busy week on the earnings front.

The

Dow Jones Industrial Average

was down 22.28 points, or 0.16%, at 14,043.73, and the

S&P 500

lost 5.01 points, or 0.32%, at 1552.58. The

Nasdaq Composite

tacked on 7.05 points, or 0.25%, to 2787.37, with strength provided by

Google

(GOOG) - Get Report

, which topped the $600 level for the first time.

Of the Dow's 30 components,

Hewlett-Packard

(HPQ) - Get Report

was the best performer, climbing 2.2%. On the other hand,

ExxonMobil

(XOM) - Get Report

was one of the worst, falling 0.7% as oil prices plummeted $2.20 to $79.02 a barrel.

"This was a small pullback when compared to the move last week," said Edgar Peters, chief market strategist with Pan Agora. "We had a little bad news, and investors took profits. There wasn't much to move the market, so the decline in oil had a lot of oil companies dropping off and that hurt."

Breadth was poor. On the

New York Stock Exchange

2.03 billion shares changed hands, as decliners topped advancers by a 2-to-1 margin. Volume on the Nasdaq reached 1.51 billion shares, with losers outpacing winners nearly 3 to 2.

Last time out, a stronger-than-expected September jobs report helped the major averages close the week with gains.

The Dow rose 91.70 points, or 0.66%, to 14,066.01, having touched a record intraday high of 14,124.54. The S&P 500 added 14.75 points, or 0.96%, to 1557.59, an all-time closing high. The Nasdaq surged 46.75 points, or 1.71%, to 2780.32. The indices notched their fourth winning week in a row.

Traders, though, were nervous ahead of the earnings reporting season, which unofficially kicks off Tuesday when Dow component

Alcoa

(AA) - Get Report

posts its results.

The earnings calendar was light to start the week, however, with

Yum! Brands

(YUM) - Get Report

the only S&P 500 company due out with results.

"The market is at high levels, so this is a perfect day for investors to step aside and let the market digest," said Peter Cardillo, chief market economist with Avalon Partners. "Earnings won't really pour in until next week, so we'll maintain this cautious attitude through this week."

Meanwhile, there were several mergers in the spotlight. German database firm

SAP

(SAP) - Get Report

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said over the weekend that it will acquire French software maker

Business Objects

(BOBJ)

for $6.8 billion in cash. SAP lost $2.87, or 4.9%, to $56.36. Business Objects, on the other hand, rallied 15% to $57.83.

In other M&A activity,

United Industrial

(UIC)

advanced 6.3% to $80.39 after

Textron

(TXT) - Get Report

set plans to purchase the maker of unmanned aircraft for almost $1.1 billion. Textron shed 2.1% to end at $64.01.

Elsewhere,

Vodafone

(VOD) - Get Report

said it will buy the Italian and Spanish assets of

Tele2 AB

for more than $1 billion. Vodafone finished down 39 cents, or 1.1%, to $34.58.

Among ratings changes, JPMorgan downgraded

Merrill Lynch

(MER)

to neutral from overweight after the financial-services company said last week it expects $5 billion in writedowns due to the credit crisis over the summer. Shares of Merrill slid $2.55, or 3.3%, to $74.12.

Deutsche Securities cut its ratings on several companies in the real estate sector.

Kimco Realty

(KIM) - Get Report

,

Avalon Bay

(AVB) - Get Report

,

Boston Properties

(BXP) - Get Report

and

Public Storage

(PSA) - Get Report

all were downgraded to hold from buy. Shares of each were down between 1.4% and 3.3%.

Away from stocks, precious metals were also lower. Gold lost $8.50 to $738.70 an ounce, and silver eased 12 cents to $13.36 an ounce.

Due to the Columbus Day holiday, bond markets were closed in the U.S. and the economic docket was bare.

European bourses were mimicking the sluggish action of the U.S. averages. London's FTSE 100, Germany's Xetra Dax and the Paris CAC 40 lost 0.2% or more. Overnight in Asia, Hong Kong's Hang Seng slipped 0.2%, while China's CSI 300 Index jumped 1.3%. Japan's Nikkei 225 Index was closed.