An early rally stoked by a host of corporate merger news lost steam on Wall Street as all of the major indexes closed lower, weighed down by energy and technology stocks.
The Dow Jones Industrial Average finished slightly lower after being up throughout the session. The  Nasdaq was lower and the S&P 500 was down.
Economic data could be the driving force in the market Tuesday as investors look for confirmation that inflation is under control in the November Producer Price Index report. Wall Street will also get more indications about the housing market from the November Housing Starts report.
Profit-taking in technology shares helped to send the Nasdaq lower Monday. Dropping oil prices and broker downgrades contributed to a decline in energy shares.
Oil prices closed down more than a dollar, slipping below the $63 a barrel mark, despite more violence in Nigeria. Oil traders were concerned about forecasts for warmer-than-normal weather in the U.S.
Shares of Citigroup traded higher after Merrill Lynch upgraded the stock to buy from neutral on greater confidence in Citigroup's 2007 $4.56 earnings per share forecast.
Other Financials Rise
Other financial Dow components rose as well including American Expressand American International Group.
Dow leaders included Altria , the parent company of PhillipMorris, and General Electric , which both traded at new 52-week highs. GE is the parent company of CNBC.
"That's constructive to see these moves for Citigroup and GE," said Carter Worth, Chief Market Technician at Oppenheimer & Company, appearing on CNBC's "Closing Bell." "Sharp moves in big names is very positive. They've been laggards and I would say they are simply catching up."
Another Merger Monday
Stocks started the session stronger on a wave of M&A announcements.
The total value of announced mergers and acquisitions worldwide so far in 2006 has reached a record $3.61 trillion, according to Richard Peterson, Thomson Financial Senior Research Analyst.
Harrah's Entertainment board has agreed in principle to accept a private buyout offer of $90 per share from Apollo Management and Texas Pacific private equity groups, according to CNBC's David Faber. Certain conditions of the deal are still being negotiated and an official announcement is likely tomorrow.
Express Scripts $26 billion bid for Caremark topped the M&A list as the largest deal of the day. Express Scripts bid could scuttle CVS's $21 billion deal in November to acquire Caremark.
Private equity groups are driving many of the potential deals.
Biomet agreed to be acquired by a private equity consortium for approximately $10.9 billion or $44 per share in cash. Biomet makes musculoskeletal medical products. The private consortium includes affiliates of the Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts and TPG.
Apollo Management has also agreed to buy Realogy Corporation , the owner of Coldwell Banker, for $6.6 billion.
Auto parts supplier Delphi Corporation has accepted a $3.4 billion investment from a group of private equity companies as part of a plan to emerge from Chapter 11 next year.Â
Oracle Reports Earnings in Line with Expectations
Oracle posted a higher quarterly profit at market close Monday, helped by revenue gains from new business software licenses.
Excluding items, Oracle posted a per-share profit of 22 cents. Analysts on average were expecting the world's biggest database software maker to post a per-share profit before items of 22 cents on revenue of $4.16 billion, according to Reuters Estimates. Revenue rose 26% to $4.2 billion.
The Dow remains up about 16% year-to-date. Analysts are debating if that pace can continue in 2007.
"I think equities have reached a fair valuation point," said Darin Richards, Chief Investment Officer at Wealth Advisors, appearing on CNBC's "Power Lunch." "It's really going to be earnings that's going to drive returns in 2007. My concern is that earnings may not come in the double-digit range."
"We are looking for a good, strong 2007," Erik Ristuben, Director of Client Investment Strategies at Russell Investment Group, told CNBC's "Morning Call." "We think the fundamentals are driving this market and a lot of deferred buying over the last five years that you are now seeing coming to the marketplace."
The week's heavy economic calendar kicks off with the latest government numbers on the third-quarter current account deficit, which widened to a record $225 billion, as expected.
Confidence among U.S. homebuilders fell in December, however, they were more optimistic about improving home sales in the future, according to a survey by the National Association of Home Builders.
The dollar traded mixed, up against the yen and the pound, but down against the euro.
Europe Closes Mostly Lower
In Europe, Frankfurt's DAX finished up slightly,while London's FTSE-100 and the Paris CAC-40 closed lower.
Another Aussie Record; Exporters Help Tokyo
Asian stocks started the week strong with markets rising across the board Monday. Australia led the rally, closing at a record high. Stocks in Tokyo and Seoul also finished stronger.
The Nikkei 225 Average closed higher with investors buying exporters such as Honda Motor and Sony on a softer yen. South Korea's Kospi Index also closed higher.