Stocks expose investor anxiety

NEW YORK (CNNMoney.com) -- Stocks slipped Monday afternoon as investors welcomed a rash of corporate deals, but were cautious amid sliding commodity prices and ahead of a number of economic reports due later in the week.

The Nasdaq (down 8.29 to 2,451.53, Charts) composite lost 0.4 percent roughly 3 hours into the session while the Dow Jones industrial average (down 11.78 to 12,569.05, Charts) and the S&P 500 (down 2.54 to 1,435.52, Charts) index both saw smaller declines.

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Stocks slumped Friday amid a selloff in the tech sector and concerns about inflation following hawkish comments from a number of Federal Reserve officials.

Techs led the downdraft again Monday despite an upgrade of Apple (up $1.12 to $84.39, Charts) by brokerage Citigroup.

Monday also brought a mix of merger and acquisition reports. However, any enthusiasm about those reports was countered by the impact of a 3 percent decline in oil prices, which dragged on energy stocks, and in turn limited the broader market.

Investors were also wary at the start of a busy week that brings reports on retail sales, housing and manufacturing, as well as Federal Reserve Chairman Ben Bernanke's visit to Capitol Hill, said Harry Clark, CEO at Clark Capital Management.

The Fed chairman gives his semiannual testimony before Congress on Wednesday and Thursday, and as always, his comments will be closely monitored for hints about interest rate policy.

He is not expected to deviate from recent comments by Fed officials, who have stressed that the economy is slowing at a reasonable pace, but that inflation pressures remain.

"If Bernanke said something unexpected, that could move stocks down, but I don't think there's much he could say that would give stocks a lift," Clark said.

He said that, after the recent advance, stocks are likely to drift or even decline a bit for the short term, particularly with the earnings reporting period over.

Home Depot (up $0.47 to $41.47, Charts) jumped about 1 percent on reports that it is considering the spinoff or sale of its HD Supply unit.

Four Seasons said it agreed to be taken private for $3.8 billion, including debt, by an investment group that included a firm run by Microsoft (Charts) Chairman Bill Gates and Saudi Prince Alwaleed bin Talal.

Private equity firm Blackstone Group said it will acquire Pinnacle Foods Group, the owner of Vlasic Pickles, Duncan Hines and other brands, for about $2.2 billion. Pinnacle is owned by JP Morgan Partners and several other affiliates.

Vodafone (up $0.61 to $29.56, Charts) said it won a majority stake in Indian mobile firm Hutchison Essar, in a deal worth $11.1 billion.

Aluminum producer Novelis (up $5.21 to $43.75, Charts) rallied more than 13 percent after it agreed to be bought by India's Hindalco Industries for $6 billion in cash and debt.

Investors also considered several deals that didn't happen, including news that Nasdaq Stock Markets (Charts) failed in its $5.3 billion bid for the London Stock Exchange, while French drugmaker Sanofi-Aventis ended talks about a potential deal with Bristol-Myers Squibb (down $1.12 to $27.40, Charts).

U.S. light crude oil for March delivery sank $1.74 to $58.15 a barrel on the New York Mercantile Exchange after the oil ministers of Saudi Arabia and Qatar said OPEC may keep OPEC unchanged at its March meeting.

The slide in oil prices helped broad stock market sentiment, but also dragged on oil service stocks.

Valero Energy (down $0.72 to $54.78, Charts), Sunoco (down $1.07 to $60.38, Charts) and a number of other oil services stocks slipped, sending the Amex Oil (down 12.25 to 1,151.11, Charts) index down by 1.2 percent.

COMEX gold for April delivery fell $5.30 to $667 an ounce.

That sent a number of gold stocks lower, with the Amex Gold Bugs (down $2.14 to $337.92, Charts) index falling almost 1 percent.

Market breadth was negative. On the New York Stock Exchange, losers beat winners three to two on volume of almost 600 million shares. On the Nasdaq, decliners topped advancers four to three on volume of 950 million shares.

Treasury prices slipped, lifting the yield on the benchmark 10-year note to 4.79 percent from around 4.78 percent late Friday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar rose versus the euro and yen after the weekend G7 meeting ended without members - finance ministers of the world's largest economies - specifically addressing the weakness of the yen, which recently fell to a 21-year low.

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