US stock indexes were treading water on Monday as oil prices above $69 a barrel took a toll on energy-dependent sectors and offset some of the gains from a fresh round of corporate take-overs.
Adding to the wary mood on Wall Street, the Wall Street Journal reported that Merrill Lynch & Co had taken control of $400 million of loan assets underlying a troubled hedge fund at Bear Stearns Cos. Inc that was heavily invested in subprime loans.
Bear Stearns shares fell 1.2 percent tot $148.26, but were off their session low, after CNBC reported that Merrill had postponed a planned auction of the seized loans.
"Crude back above $69 a barrel is kind of a negative backdrop in terms of inflation. You also had the home builders index at a 16-year low, so there's no sign that the housing woes have gone past us," said Todd Clark, director of stock trading at Nollenberger Capital Partners in San Francisco. "But in general, the market hasn't been able to mount any downside momentum, so I'd call this a healthy pause."
The Dow Jones industrial average was down 9.83 points, or 0.07 percent, at 13,629.65. The Standard & Poor's 500 Index was down 0.46 of a point, or 0.03 percent, at 1,532.45. The Nasdaq Composite Index as down 0.03 of a point, or unchanged on a percentage basis, at 2,626.68.
US crude oil futures rose as high as $69.15 a barrel, while London Brent touched a 10-month high of $72.25. Freight and logistics companies were one of the worst-performing sub-sectors as oil prices gained. Further weighing on the group, Bear Stearns cut its fourth-quarter earnings outlook for FedEx Corp.
Shares of logistics operator CH Robinson Worldwide Inc was down 2.7 percent at $53.31. FedEx stock fell 1.4 percent to $109.86, while rival United Parcel Service Inc fell 0.9 percent to $73.38.
The Dow Jones US Home Construction Index was down 0.8 percent after a survey showed sentiment among US home builders fell in June to the lowest level since February 1991. Momentum to the downside was limited by gains in Alcoa Inc, up 1.8 percent at $42.36 after a report in The Times newspaper in London said BHP Billiton Ltd/Plc was exploring a possible $40 billion take-over of the world's largest aluminium company.
Shares of Genesco Inc jumped 8 percent to $53.57 on Monday after athletic shoe retailer Finish Line Inc said it agreed to buy the shoe and hat retailer for $54.50 per share or about $1.5 billion. Shares of Finish Line slid 7.2 percent to $11.72.
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