Stocks Run Out of Steam

Rising crude erases much of the upbeat sentiment about Monday's spate of mergers.
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Updated from 4:04 p.m. EST

An early run in stocks ran out of steam Monday and the broader market ended only moderately higher as surging oil offset a spate of merger activity.

The

Dow Jones Industrial Average

lost 0.32 point to close at 11,076.02. The

S&P 500

rose 2.55 points, or 0.2%, to 1284.13. The

Nasdaq Composite

rose 4.99 points, or 0.22%, to 2267.03.

"The M&A activity gave us a bid to start the day, but then oil turned upwards and erased our small gains," said Jay Suskind, head of institutional equity trading with Ryan Beck & Co. "Interest rates are still climbing and, combined with oil, it was enough to continue this tug of war."

Losses of 1% or more in

General Motors

(GM) - Get Report

,

McDonald's

(MCD) - Get Report

and

Honeywell

(HON) - Get Report

pressured the Dow.

About 1.51 billion shares traded on the

New York Stock Exchange

, with advancers beating decliners by a 9-to-7 margin. Trading volume on the Nasdaq was 1.69 billion shares, with advancers outpacing decliners 8 to 7.

The 10-year Treasury was down 3/32 in price to yield 4.77%. The dollar fell against the euro and was little changed against the yen.

A number of big takeovers made news.

Capital One

(COF) - Get Report

announced an agreement to acquire

North Fork

(NFB)

for $14.6 billion, uniting two banks, while

McClatchy

(MNI) - Get Report

will swallow

Knight-Ridder

(KRI)

for $4.51 billion plus assumed debt.

In Europe, German drug and chemical maker

Merck KGaA

made an unsolicited bid for rival

Schering AG

(SHR)

that's worth about $18 billion. The

New York Stock Exchange

(NYX)

, meanwhile, is reportedly mulling an offer for the London Stock Exchange that would compete with a $4.2 billion bid publicized Friday from the

Nasdaq Stock Market

(NDAC)

.

Oil spiked after the reported unraveling of a deal in which Russia had planned to carry out uranium enrichment on Iran's behalf. The plan was part of a compromise intended to ease tensions around Iran's nuclear research program. In Nymex floor trading, April crude finished up $1.81 to $61.77 a barrel.

The Philadelphia Stock Exchange Semiconductor Sector index was lower by 0.5% after a 7.6% decline in shares of

Advanced Micro Devices

(AMD) - Get Report

. Punk Ziegel & Co. downgraded AMD to accumulate from buy.

Elsewhere, the Amex Oil index rose 2.1% and the Philadelphia/KBW Bank Sector index gained 0.3%, while the Amex Airline index lost 1.2%.

To view Gregg Greenberg's video take on today's market, click here

.

Apple Computer

(AAPL) - Get Report

closed 3.9% higher after Citigroup raised the stock to buy from hold. The firm believes Apple will introduce new products, including a new video iPod, for the company's 30th anniversary in April. Apple was up $2.49 to $65.68.

CarMax

(KMX) - Get Report

guided up for the fourth quarter, saying its wholesale business did better than expected. The used-car dealer expects to make 37 cents to 39 cents a share for the fourth quarter, well ahead of the 28-cent estimate of analysts surveyed by Thomson Financial. Shares of CarMax surged $4.24, or 13.6%, to finish at $35.36.

Shares of

AstraZeneca

(AZN) - Get Report

finished higher after its Crestor anticholesterol drug was found in a clinical study to reduce plaque in the arteries of certain heart patients. Vytorin, from

Schering-Plough

(SGP)

and

Merck

(MRK) - Get Report

, has been making strides as a cholesterol treatment.

AstraZeneca added $1.16, or 2.3%, to $50.96. Schering-Plough tacked on 41 cents, or 2.3%, to close at $18.46.

After the bell, retail chain

Target

(TGT) - Get Report

is expected to report same-store sales data for February, with a rise of 1.9% expected. Before the report, Target finished up 5 cents, or 0.1%, to $53.36.

Also,

Sonus Networks

(SONS)

will release fourth-quarter earnings late Monday. The Thomson First Call consensus is for a penny a share. Sonus finished Monday's session with a gain of 15 cents, or 2.9%, to $5.42.

Overseas markets were higher, with London's FTSE 100 adding 0.8% to 5953 and Germany's Xetra DAX rising 0.9% to 5855. In Asia, Japan's Nikkei surged 1.5% overnight to 16,362, while Hong Kong's Hang Seng rose 0.7% to 15,542.