NEW YORK (CNN/Money) - Stocks stumbled to the finish Monday after getting off to a strong start. The Nasdaq ended the session in negative territory, while blue chips barely clung to slight gains as market fatigue and weakness in pharmaceuticals counterbalanced retreating oil prices and a stronger-than-expected reading on the economy.

After challenging its 2004 high of 10,737.70 in the morning, the Dow Jones industrial average (up 11.68 to 10,661.60, Charts) closed just 0.11 percent higher. The broader Standard & Poor's 500 (up 0.45 to 1,194.65, Charts) index eked out a fractional gain.

The Nasdaq composite (down 7.35 to 2,127.85, Charts), on the other hand, finished the session down about 0.4 percent.

"We've seen pretty much what we're going to get of a year-end rally," said Katie Towshend, chief market technician at MKM Partners, who says technical indicators suggest the market is vulnerable to a deeper pull-back. "We've seen the best of it at this point. The short-term momentum has slowed on a lot of sectors."

Market breadth turned negative during the session as well, with declining issues on the New York Stock Exchange edging slightly ahead of advancers. The Nasdaq was more markedly negative, with decliners beating advancers nearly 2 to 1.

"It's basically technical stuff rather than anything fundamental," said Peter Boockvar, equity strategist at institutional trading firm Miller Tabak & Co., who noted that the Dow earlier had failed to break through its year high of 10,795. "The market has been showing signs of fatigue here."

The afternoon slump came despite some mildly positive news on the economic front. The index of leading U.S. economic indicators rose 0.2 percent in November, the Conference Board said, ending a string of five months of declines. The index aims to forecast the economy's strength over the next three to six months. The increase was greater than the 0.1 percent expected by economists surveyed by Briefing.com.

Oil prices slid below $46 a barrel, giving back some of last week's climb. U.S. light crude for January delivery lost 64 cents to settle at $45.64 a barrel.

In a fairly quiet week for corporate earnings announcements, Tuesday will bring two notable reports that could shed light on Wall Street's expectations for the year ahead. Investment banks Bear Stearns (BSC) and Morgan Stanley (MWD) are scheduled to report results Tuesday morning.

Analysts expect Bear Stearns to post profits of $2.14 a share, down from $2.19 a year ago, according to First Call. By contrast, analysts are looking for earnings of $1.01 a share from Morgan Stanley, up from 94 cents a year ago.

Two other notable earnings announcements are on tap for Tuesday. General Mills is expected to post a profit of 87 cents a share, up from 85 cents a year ago. After the close, Research In Motion, maker of BlackBerry wireless devices, is due to report its fourth-quarter results. Analysts expect profits to come in at 55 cents a share, up from 16 cents a year ago.

In corporate news, the merger and acquisition frenzy of recent weeks continued Monday as Exelon (up $1.19 to $43.05, Research), the largest U.S. nuclear power company, agreed to buy Public Service Enterprise Group (up $3.29 to $50.56, Research), a New Jersey utility, for $12.8 billion in stock. The combination creates the country's largest utility, which will be called Exelon Electric & Gas. Shares of both companies shot higher after the deal was announced. Exelon gained 2.8 percent, while PSE&G climbed nearly 7 percent.

Shares of Electronic Arts (up $0.30 to $59.94, Research) edged 30 cents higher after the leading video game publisher announced it bought a 19.9 percent stake in French game developer UbiSoft Entertainment. The purchase, which UbiSoft termed "hostile," fueled speculation that Electronic Arts may be positioning for a takeover of the company. UbiSoft stock jumped nearly 25 percent in Paris trading.

In other technology news, antivirus software developer Trend Micro (up $4.30 to $54.78, Research) said it will provide antivirus scanning for MSN's Hotmail service, replacing longtime Microsoft partnerMcAfee (down $1.97 to $26.98, Research). Shares of Trend Micro soared more than 12 percent before pulling back to close 8.5 percent higher. McAfee, meanwhile, dropped nearly 7 percent.

Elsewhere, Pfizer (down $1.46 to $24.29, Research) continued to weigh down the Dow. The drugmaker agreed to a request from the Food and Drug Administration to immediately stop advertising its arthritis drug Celebrex.

Pfizer last week warned that patients taking Celebrex in a long-term cancer-treatment study had more heart attacks than patients who took a placebo. Pfizer shares tumbled 5.7 percent after plunging 11 percent in heavy trading on Friday.

Helping to prop up the Dow was oil giant ExxonMobil (up $1.26 to $51.06, Research), which led the Dow 30 stocks with a 2.5 percent gain.

Directors of embattled mortgage giant Fannie Mae met over the weekend and decided that CFO Timothy Howard must leave the company, according to a newspaper report.

The board has been considering changes in top management, including the possible removal of CEO Franklin Raines, after the Securities and Exchange Commission said the mortgage firm had run afoul of accounting rules. Shares of Fannie Mae (down $0.89 to $69.42, Research) dropped more than 1 percent.

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Shares of Sirius Satellite Radio (up $0.29 to $7.97, Research) rallied about 4 percent in heavy trading as DaimlerChrysler noted increased demand for the radio service in its vehicles.

Sprint (up $0.17 to $24.84, Research) said it expects a low single-digit increase in 2005 revenue, with strength in its wireless business helping to counter continued weakness in long distance. That guidance, however, did not factor in Sprint's merger with Nextel, expected to close in the second half of 2005. Sprint shares rose slightly.

Treasury prices rose slightly, dropping the yield on 10-year notes to 4.18 percent from 4.2 percent last week.

In currency markets, the dollar fell against the euro and the Japanese yen. COMEX gold rose to 443.50 an ounce.