Stocks declined, with General Motors dragging on the Dow amid news of another strike and Yahoo weighing on technology stocks.
“It seems like we went through a real, strong technical number -- 13,000. Maybe people are just sitting back and saying ‘Now what the heck?’ How do they value things?,” Robert Heller, managing director at Chapdelaine Brokerage told CNBC. “People really have to look at companies and see where we’re going from here. Ask big questions about the economy and … about the market.”
Investors digested a mixed economic report: The Institute for Supply Management reported the U.S. services sector unexpectedly grew in April, snapping a three-month contraction streak, but a gauge of prices rose, which may have spurred inflation concerns.
General Motors led the Dow industrials lower as the auto maker faces yet another strike -- this time at its Chevy Malibu plant in Kansas.
Energy was the winning sector of the day, gaining more than 1 percent, after crude oil topped $120 a barrel for the first time.
That spurred talk that the commodities trade might be back, with contract drillers Nabors and Noble , as well as U.S. Steel , all hitting new highs.
Energy's ascent grounded airline stocks, with the American Stock Exchange airline index off 3 percent. Northwest , Continental and UAL , parent of United, were all down at least 6 percent.
Homebuilders advanced after Hovnanian Enterprises raised its forecast for fiscal 2008 cash flow to more than $300 million from the $100 million it projected in December. KB Home , Pulte Homes and Toll Brothers all rose more than 3 percent.
Morgan Stanley shares dropped amid news that the banking giant is planning another round of layoffs, finalizing a plan to reduce its workforce by another 5 percent.
The market was buzzing early with deal news and at the top of that list was Microsoft-Yahoo.
Yahoo plunged after Microsoft over the weekend withdrew its offer to buy Yahoo, citing the companies' differences over price. Microsoft had been willing to go to $33 a share but Yahoo wanted at least $4 more.
Microsoft was the biggest gainer on the Dow.
Yahoo CEO Jerry Yang "is certainly under a lot of pressure now," Roland
Hirschmueller, an equities trader at German brokerage Baader, told Reuters. "His days are numbered, if he doesn't manage to come up with an alternative strategy."
Microsoft could still make a comeback bid, the Wall Street Journal reports, citing the fact that Oracle and PepsiCo walked away from big takeover attempts only to return to the negotiating table later.
Google shares advanced amid relief that the Internet-search company won't have to contend with the online-advertising behemoth that would result from a Microsoft-Yahoo deal.
Financials were some of the day's biggest decliners, sliding more than 1 percent, amid renewed concerns about the credit crisis after analysts from one brokerage firm said said Bank of Americacould walk away from its offerto buy Countrywide, the nation's largest mortgage lender, citing the hefty writedowns Bank of America would have to take due to the deterioration in the mortgage market.
A collapse of the Countrywide deal "would ignite fresh fears that the credit crisis continues to deepen. A lot of people are saying we're in the end, but that's coming from people who would benefit the most from it," Kevin Kruszenski, head of listed trading at KeyBanc Capital Markets, told Reuters. "The stock market is going to sell first and ask questions later."
Sprint Nextel, shares rose following news that Deutsche Telekom , which owns T-Mobile,is considering a bid for the company. A deal would create the largest U.S. mobile carrier, combining No. 3 Sprint with No. 4 T-Mobile.
Boeing denied a weekend report that its 787 Dreamliner faces further delays.
Marvel beat first-quarter earnings expectations and raised its full-year outlook following its weekend box-office smash "Iron Man," which took in $100.75 million.
(See a list of all the latest earnings surprises.)
This Week:
MONDAY: Anadarko, Cleveland Cliffs earnings; Bernanke speaks on foreclosures
TUESDAY: Indiana, North Carolina primaries; Earnings from Fannie Mae, Cisco and Disney
WEDNESDAY: Mortgage applications; Productivity; Pending home sales; Crude inventories; Consumer credit; Earnings from News Corp., Transocean
THURSDAY: Retail same-store sales; Jobless claims; Wholesale trade; Cablevision earnings
FRIDAY: Trade report
Send comments to cindy.perman@nbcuni.com.