US blue chips inched up on Monday after Wal-Mart reported strong sales over the weekend, but gains were limited by Microsoft Corp as investors digested the latest economic data and corporate earnings.
A slew of fresh mergers and acquisitions should have lifted the major indexes. But this was offset by Microsoft's drop $30.00, making it the biggest negative influence on the three major indexes.
But the modest increase in the broader market followed the S&P booking its strongest weekly gain since August and the Dow clocking its biggest weekly gain since November last week as economic data suggested US rates will hold steady for now.
"We're just through the fourth-quarter earnings season and people are just sort of digesting what the earnings were," said John Canally, senior investment strategist, at PNC Advisors in Philadelphia.
"Inflation is well contained so the Fed is kind of on the sidelines here for a while. We're in one of those holding patterns that you get every so often," he said.
The Dow Jones industrial average rose 13.06 points, or 0.10 percent, to 12,666.55, while the Standard & Poor's 500 Index was little changed, down 0.47 of a point, or 0.03 percent, at 1,447.92. The Nasdaq Composite Index was down 3.07 points, or 0.12 percent, at 2,472.81.
Microsoft capped the advances by the three major indexes as its shares fell 2.4 percent to $29.48, reversing all the gains of the last month in its largest one-day decline in almost six months.
The drop in Microsoft followed an article in business weekly Barron's February 5 issue, which suggested Microsoft is more likely to fall than rise with the release of its Vista operating system, as expectations for Vista's success were already factored into its stock's price.
Meanwhile, Wal-Mart Inc rose 1.2 percent to $48.66, after reaching a three-month high at $48.90 earlier in the session. The world's biggest retailer estimated on Saturday that January sales rose a stronger-than-expected 2.2 percent at its US stores open at least a year.
Among the deal news, Vornado Realty Trust on Sunday sweetened its $23.2 billion bid for Equity Office Properties Trust, the top US office landlord, by offering to pay the cash portion up front. Equity Office shares rose 0.1 percent to $55.46, while Vornado was down 0.3 percent at $125.03.
Investors Financial Services Corp stock jumped nearly 30 percent to $59.86 after the company agreed to be acquired by State Street Corp for about $4.5 billion. This was the Nasdaq's biggest percentage gainer.
Among decliners in the S&P 500 were shares of education lender SLM Corp which fell after US President George W. Bush's proposal to cut grants for education in his fiscal 2008 budget. SLM's stock fell 10.4 percent to $41.70, just above a two-year low of $41.57, on the New York Stock Exchange.
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