US stocks fell on Monday as rising crude oil prices reignited economic worries and offset early optimism about a proposed $31.8 billion purchase of Texas power company TXU Corp. Crude prices rose as Iran and the United Nations squared off over Tehran's nuclear program, adding to concern about inflation and higher interest rates, which could hurt corporate profits.
Investors were also cautious after a news report that former Federal Reserve Chairman Alan Greenspan said a US recession was possible by the end of the year.
"The morning started out with a rather mild tone and Greenspan's commentary, relative to the potential for a recession, has kind of undermined confidence," said Ned Riley, chief executive at Riley Asset Management in Boston. "People are a little bit apprehensive and clearly would love to have lower oil prices," he added.
The Dow Jones industrial average was down 28.92 points, or 0.23 percent, at 12,618.56. The Standard & Poor's 500 Index was down 4.60 points, or 0.32 percent, at 1,446.59. The Nasdaq Composite Index was down 19.01 points, or 0.76 percent, at 2,496.09. US crude for April delivery rose 45 cents to $61.60 on the New York Mercantile Exchange.
The jump in oil boosted shares of energy companies such as Exxon Mobil Corp, which was up 0.6 percent at $75.65. But technology shares and large, economically-sensitive manufacturers, such as Boeing Co, fell on worries that higher oil prices would hurt companies' profits and borrowing capability.
Wireless chip maker Qualcomm Inc slipped 2.2 percent to $42.42. Shares of Boeing dropped 1.3 percent to $89.12 on the NYSE. TXU was the second biggest gainer on the S&P 500 as investors viewed the deal activity as a sign stock prices are attractive and more big deals could follow.
TXU agreed to be bought by a group led by private equity firms Kohlberg Kravis Roberts & Co and Texas Pacific Group. Its shares rose 13.5 percent to $68.09 on the New York Stock Exchange. Including debt, the price tag for TXU is about $45 billion, which would make it the largest private equity deal ever.
Other power and utilities companies rose after the TXU news. NRG Energy Inc, the second largest power generator in Texas after TXU, gained more than 7 percent to $68.14. Also in deal news, shares of Dow Chemical Co rose 5.4 percent to $45.80 after a British newspaper said the company could be a take-over target.
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