NEW YORK (CNNMoney.com) -- Stocks slipped Monday, led by technology, as rising oil prices sparked worries about inflation ahead of Tuesday's Federal Reserve policy meeting, in which the central bank is expected to put its rate-hiking campaign on hold.

The tech-fueled Nasdaq composite (down 12.55 to 2,072.50, Charts) lost around 0.6 percent.

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The Dow Jones industrial average (down 20.97 to 11,219.38, Charts) lost 0.2 percent, and the broader Standard & Poor's 500 (down 3.59 to 1,275.77, Charts) index lost 0.3 percent.

Energy prices jumped Monday after oil producer BP (down $2.09 to $70.45, Charts) began shutting down the Prudhoe Bay oil field in Alaska owing to suspected corrosion damage to pipelines - a move that affects around 8 percent of domestic production.

U.S. light crude oil for September delivery jumped $2.22 to $76.98 a barrel on the New York Mercantile Exchange, just short of the record close of $77.03 per barrel, hit in July.

"Any time you see oil surge like this, it tends to upset the markets," said Russell Lundeberg Jr., chief investment officer at money manager Barrett Capital Management.

Monday's market was also impacted by speculation about what might emerge from Tuesday's Fed meeting, especially what the central bankers might say in the statement.

Such concerns will likely keep stocks in a tight range Tuesday morning, as investors wait for the 2:15 p.m. ET announcement.

Ahead of that, the preliminary read on second-quarter productivity is due. Productivity is expected to have grown at a 1.2 percent annualized rate, according to economists surveyed by Briefing.com. Productivity grew at a 3.7 percent rate in the previous quarter.

Earnings reports are also due Tuesday morning from Cablevision (Charts) and Clear Channel (Charts), among others.

In other news, News Corp. (Charts) said late Monday that it has picked Google (Charts) as the search engine for popular site MySpace.

The central bank has boosted the fed funds rate, a key short-term lending rate, 17 times since June 2004, lifting the rate from 1 percent to 5.25 percent.

Traders are now betting there's only a 22 percent chance that the central bank will boost rates another quarter point Tuesday, little changed from late Friday and sharply lower than days before, according to futures contracts traded in Chicago.

But the prospect of a Fed pause - something Wall Street bulls have been seeking for a while - seemed to be something of a mixed blessing, in that it also suggests slower economic growth.

That's what investors focused on Friday after the weaker than expected read on July jobs growth. Stocks rallied initially on bets that the slower growth pointed to a Fed pause, but the focus soon shifted to worries about a slowing economy.

Such worries mean that the stock market could be poised for a sell-off after the Fed statement, Lundeberg said.

For investors to feel reassured by the statement it would need to include "a perfect balance between the Fed's intent to continue to fight inflation, plus expectations that we will see a so-called soft landing, rather than a recession," he said.

But the reality is that the Fed may opt to keep the statement vague in terms of future interest rate hikes, said Jim Melcher, president at Balestra Capital.

"If they say they are going to continue raising rates, that's a problem for stocks," Melcher said. "If they say they're done, that's probably good."

"But I don't think there will be much of a resolution tomorrow," he added. "And I don't think it will give the markets much assurance or comfort."

Companies hit by higher energy prices slipped, with transportation firms such as railroads and airlines under pressure. The Dow Jones Transportation (down 62.13 to 4,316.43, Charts) average lost 1.4 percent.

Among tech movers, computer software, computer hardware and semiconductor stocks all weakened.

Apple Computer edged lower after the company introduced its latest desktop computer line at its annual software developers conference, as expected, but offered investors few surprises in the way of new gadgets, Reuters said.

Also dragging on the Nasdaq was Hansen Natural (down $10.40 to $29.85, Charts), which slumped almost 26 percent in unusually active trading after the energy drink maker reported quarterly earnings that rose from a year ago, on sales that missed analysts' forecasts.

Among other decliners, Mylan Laboratories (down $3.09 to $19.92, Charts) slumped 13 percent in active New York Stock Exchange trade on a regulatory setback. U.S. health regulators have determined that a second company can market a generic version of Johnson & Johnson's (down $0.26 to $63.27, Charts) pain patch Duragesic, in addition to Mylan.

Among blue-chip movers, Walt Disney (down $0.51 to $29.39, Charts), Merck (down $0.51 to $40.84, Charts) and Verizon Communications (down $0.47 to $33.30, Charts) posted declines.

On the upside, Andrew Corp. (up $1.67 to $9.56, Charts) jumped over 21 percent in active Nasdaq trading after telecom gear maker CommScope made a bid for the cable maker worth $1.5 billion in cash. CommScope (down $2.16 to $28.00, Charts) shares fell 7.2 percent.

AES (up $1.82 to $20.07, Charts) jumped 10 percent after reporting quarterly sales and earnings that beat estimates. The power company also boosted its 2006 earnings forecast

Oil and gas stocks rose with the price of the raw commodity, lifting the Amex Oil (up 8.22 to 1,207.90, Charts) index by 0.7 percent.

Gold stocks also got a lift from higher gold prices, with the Amex Gold Bugs (up $3.26 to $340.80, Charts) index adding 1 percent.

Market breadth was negative. On the New York Stock Exchange, losers topped winners five to three as 1.35 billion shares changed hands. On the Nasdaq, decliners beat advancers by almost two to one as 1.45 billion shares changed hands.

Treasury prices fell, raising the yield on the benchmark 10-year note to 4.92 percent from 4.90 percent late Friday. Bond prices and yields move in opposite directions.

In currency trading, the dollar was little changed versus the euro and the yen.

COMEX gold for December delivery gained $3.50 to $659.50 an ounce.

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