Stocks struggle for direction

NEW YORK (CNNMoney.com) -- Stocks seesawed Monday as investors struggled for guidance in a session with no major economic readings on tap.

The Dow Jones industrial average edged higher 2 hours into the session, while the broader S&P 500 index was flat.

The tech-laden Nasdaq composite edged lower.

After a string of losing sessions, U.S. markets capped last week with a three-day rally.

Recent fears that the Federal Reserve will have to raise interest rates sometime this year, which had weighed on markets recently, were tempered by easing bond yields and tame inflation readings both at the wholesale and consumer level.

Like last week, investors will be closely eyeing any major economic readings this week for hints about the future direction of interest rates, said Alan Lancz, money manager and editor of Lancz Letter. One possibility, he said, could be rising energy prices and their impact on inflation.

"Energy prices have been inching up off the radar chart," said Lancz. "(It) is a big tax on the consumer that could rear its ugly head again."

Last Friday oil prices moved to their highest level in nine months following violence in the Middle East and supply fears from U.S. refineries.

U.S. light crude for July delivery climbed 88 cents Monday to $68.05 a barrel.

Alcoa (up $0.90 to $42.50, Charts, Fortune 500) was one of the few Dow 30 advancers following a report by the Times of London that mining group BHP Billiton is reconsidering a takeover bid for the aluminum producer.

In other corporate news, the fast-food chain Wendy's (down $1.07 to $38.66, Charts) said Monday it was exploring a possible sale of the company and also cut its 2007 earnings forecast, sending the stock down about 2.6 percent in early trading.

Boeing (down $0.17 to $97.98, Charts, Fortune 500) rival Airbus collected a number of plane orders at the Paris Air Show, including an $8 billion deal with U.S. carrier US Airways.

British media outfit Pearson (down $0.09 to $17.11, Charts) is in talks with General Electric (up $0.32 to $38.12, Charts, Fortune 500) about a joint bid for Wall Street Journal publisher Dow Jones (down $0.41 to $58.60, Charts) that would permit the controlling Bancroft family to keep a minority interest, according to a report published Sunday afternoon.

Bond prices edged lower, pushing up the benchmark 10-year yield to 5.17 percent from 5.16 percent late Friday. Bond prices and yields move in opposite directions.

Asian markets finished sharply higher Monday, with Japan's benchmark Nikkei index climbing about 1 percent to a three-month high. In Europe, stocks were mixed in midday trading.

In currency trading, the dollar eased against the euro, but was higher versus the yen.

COMEX gold for August delivery added $2.70 to $661.40 an ounce.

Market breadth was negative. On the New York Stock Exchange, losers edged out gainers on volume of 406 million shares. On the Nasdaq, decliners barely beat advancers as 627 million shares changed hands.