US stocks were little changed on Monday as worries about the economy and fallout from the housing market offset optimism about stock valuations fuelled by a new round of take-overs. A report showing weaker-than-expected factory activity and rising price pressures revived concerns about the economy's health.
Financial stocks fell after subprime mortgage lender New Century Financial Corp filed for bankruptcy protection. The Philadelphia Keefe Bruyette & Woods index of bank stocks was down 1.8 percent and had its sharpest decline in nearly 3 weeks.
"(The data is) highlighting the weakening economy and the inflationary concern," said Barry Hyman, equity market strategist at EKN Financial Services Inc in New York.
But investors were heartened about stock valuations after First Data Corp, a credit-card and payment processor, said it had agreed to a $29 billion buyout bid by private equity firm Kohlberg Kravis Roberts & Co First Data shares were up 20.8 percent at $32.49.
The Dow Jones industrial average was up 8.45 points, or 0.07 percent, at 12,362.80. The Standard & Poor's 500 Index was up 0.56 points, or 0.04 percent, at 1,421.42. The Nasdaq Composite Index was down 8.84 points, or 0.37 percent, at 2,412.80.
A jump in shares of tobacco maker Altria Inc, which said late Friday it completed its spin-off of Kraft Foods Inc, led advances on the Dow. The stock was up 2.9 percent at $67.80.
Technology shares, which are sensitive to growth concerns, also declined, led by losses in software maker Microsoft Corp and Web search company Google Inc A downgrade of computer maker Sun Microsystems Inc added to the negative tone in technology.
The Institute for Supply Management said factory activity grew in March, but at a slower rate than in February and less than analysts had forecast. It also showed a jump in an inflation component, suggesting rising price pressures could dissuade the Federal Reserve from cutting interest rates soon even as growth slows.
Banking stocks declined amid worries about the subprime mortgage lending market and the data suggesting that the Federal Reserve won't cut interest rates anytime soon.
Shares of Citigroup dropped 1.2 percent to $50.71 on the New York Stock Exchange, while shares of Bank of America fell 1.4 percent to $50.32.
The sell-off in banking shares also followed a profit warning from M&T Bank Corp, whose stock dropped 8.9 percent to $105.52, after it said late on Friday that problems in mortgages with limited income documentation would hurt results. Microsoft shares fell 0.9 percent to $27.61, while Google declined 1 percent to $453.58 and Sun Microsystems declined 4.3 percent to $5.75.