Updated from 4:13 p.m. EDT

The

Dow Jones Industrial Average

closed slightly higher Monday, but weakness in drug giant

Merck

(MRK) - Get Report

contributed to keeping the measure's gains in check.

The Dow was up 10.66 points, or 0.1%, to 10,569.89, after having been up as many as 82 points earlier. The

S&P 500

was higher by 2.02 points, or 0.17%, at 1221.73, and the

Nasdaq Composite

gained 5.85 points, or 0.27%, at 2141.41.

"The market was confused and it just didn't know what to do today," said John Hughes, equity strategist with Shields & Co. "We had a pop on the merger news this morning but there was no follow-through. It's a Monday in the summer with low volume and nothing behind us pushing us. Today was a day where we were easily pushed in either direction."

About 1.21 billion shares changed hands on the

New York Stock Exchange

, with advancers beating decliners by a 5-to-3 margin. Trading volume on the Nasdaq was 1.39 billion shares, with advancers outpacing decliners 8 to 7.

The 10-year Treasury was down 1/32 in price to yield 4.21%. The dollar was weaker against the yen and the euro. Crude oil finished higher, as the September contract added 10 cents to $65.45, briefly topping $66 a barrel earlier in the session.

"We may be in for some choppy trading without anything to direct us," says Peter Cardillo, chief market analyst with SW Bach & Co. "Traders will probably keep a close eye on oil."

Stronger areas Monday included technology, energy, semiconductors, utilities and transportation. Retail, health care and homebuilding were among lagging sectors.

Wall Street is still contemplating what a $253 million legal verdict against Merck will mean for the drug company. On Friday, a jury in Texas ruled that Merck was negligent in its marketing of the painkiller Vioxx and liable for the death of a 59-year-old man. Merck said it would appeal, but shares of the New Jersey company dropped more than 7% Friday.

On Monday, Credit Suisse First Boston upgraded Merck to neutral from underperform due to valuation, but warned that it believes Merck's fundamental outlook remains poor. Merck shares fell 17 cents, or 0.6%, to $27.89.

Northwest Airlines

(NWAC)

shares remained in focus because its mechanics union went on strike early Saturday morning. The airline put replacement workers on the job and said its weekend schedule went fairly smoothly.

On Monday, Standard & Poor's put Northwest on credit watch with negative implications. Shares of Northwest added 28 cents, or 5.2%, to $5.66.

Just weeks after one Chinese company failed in its bid to buy

Unocal

(UCL)

, a unit of

China National Petroleum

reached a deal to buy Canada's

PetroKazakhstan

(PKZ)

for $55 a share, or about $4.2 billion. PetroKazakhstan rose $8.35, or 18.4%, to $53.75.

Elsewhere,

OSI Pharmaceuticals

(OSIP)

agreed to buy

Eyetech Pharmaceuticals

(EYET)

, a maker of treatments for eye diseases, for $20 a share, or $935 million. The price is a 43% premium over Eyetech's last close. OSI shares slid $8.85, or 21.7%, to $31.92, while Eyetech shares surged $4.14, or 29.6%, to close at $18.13.

Additionally, after

The Wall Street Journal

reported that Ripplewood won't raise its bid for appliance maker

Maytag

(MYG)

,

Whirlpool

(WHR) - Get Report

completed its acquisition of the company. In the deal, Whirlpool is paying $21 a share for Maytag and will assume $977 in debt. Maytag shares dipped 2 cents, or 0.1%, to $18.69, while Whirlpool fell 35 cents, or 0.4%, to $81.48.

In earnings news,

H.J. Heinz

(HNZ)

reported first-quarter net income of $157.3 million, or 45 cents a share, down from $194.8 million, or 55 cents a share, a year ago. Sales climbed 5.3% to $2.11 billion. Excluding items, Heinz would have earned 52 cents a share, beating the Thomson First Call consensus of 49 cents a share on revenue of nearly $2.08 billion. Heinz climbed 39 cents, or 1.1%, to $36.69.

Shares of

Panacos Pharmaceuticals

(PANC)

were surging almost 50% after the company said its experimental HIV drug met a primary endpoint in a midstage study. Panacos shares jumped $3.25, or 46.1%, to $10.30.

In ratings moves, Bank of America Securities and KeyBanc Capital both upgraded

Red Robin Gourmet Burgers

(RRGB) - Get Report

to buy after it said late Friday that former CEO Michael Snyder has reimbursed the company $1.25 million for personal travel and entertainment expenses. The stock, which rose 1.4% on Friday, was up another $3.18, or 7.2%, to finish at $47.50.

Overseas, Japan's Nikkei rose 1.3% to 12,453, and Hong Kong's Hang Seng added 1.2% to 15,219. London's FTSE gained 0.1% to 5318, and Germany's Xetra DAX climbed 0.2% to 4941.