US stocks strayed close to unchanged Monday, as Wachovia Corp's $14 billion deal to acquire SouthTrust Corp bolstered sentiment, but caution before next week's Federal Reserve meeting and US transfer of power in Iraq restrained buyers.
SouthTrust shares ranked among the Nasdaq's top percentage gainers after Wachovia, the No 4 US bank, agreed to buy SouthTrust for $14.3 billion in stock. The deal follows recent major US bank acquisitions announced since October.
Cisco Systems Inc and Nortel Networks Corp both rose in active trading, helped by a report the chief executives of both companies met on Friday in Toronto, a sign that talks of a partnership between them is getting serious.
Many investors are hesitant to place large orders ahead of the Federal Reserve's policy-setting meeting on June 29-30.
Wall Street widely expects the Fed will start a tightening cycle by raising interest rates by one-quarter of a percentage point at the end of the meeting in a bid to curb inflation.
June 30 also marks the handover of power in US-occupied Iraq to an interim Iraqi government, a date that many investors fear could be marked by an escalation of violence.
The Dow Jones industrial average fell 2.10 points, or 0.02 percent, to 10,414.31. The Standard & Poor's 500 Index added 0.55 of a point, or 0.05 percent, to 1,135.59. The technology-laced Nasdaq Composite Index gained 2.80 points, or 0.14 percent, to 1,989.59.
"There's a high degree of certainty that the Fed will raise rates, so people have time to change their portfolios in the manner they want in a rising rate environment," said Adam Tracy, listed trading director at Thomas Weisel Partners in San Francisco. "But on the geopolitical side, there's still risk since no one knows what will happen at month's end, and there's some apprehension on that front."
No major economic data is expected until Thursday when durable goods orders and weekly jobless claims data are released.
Crude oil prices retreated on the New York Mercantile Exchange. July crude prices fell $1.20 to $37.55 a barrel. On Friday, they ended higher for the third straight day.
Wal-Mart Stores Inc restrained the blue-chip Dow, after the discount retailer indicated that June sales at stores open at least a year could miss its expectations. Shares of Wal-Mart, the world's largest retailer, shed 25 cents, or 0.4 percent, to $55.38.
Nortel shares rose 7 cents to $4.51 on the New York Stock Exchange, where they were the most active issue. Cisco shares shed 12 cents, or 0.5 percent, to $23.30 on the Nasdaq.
Wachovia shares fell $1.71, or 3.6 percent, to $45.29, while those of SouthTrust jumped $4.80, or 13.8 percent, to $39.60.
Taser International Inc shares soared, after the stun gun maker raised its revenue forecast for the year, citing strong new business from US law enforcement agencies.
Shares of Taser, whose volatile stock has been the focus of much debate about its high valuation, rose $5.08, or 19.7 percent, to $30.87.