Stocks Eke Out Modest Gains

Wall Street wobbled through an indecisive session Monday, squeezing out a modest gain after the price of oil fell back from $66 a barrel. News of several large acquisitions carried some stocks higher.

Analysts said that with many traders on vacation and no economic news to guide the market, stocks were particularly vulnerable to concerns about soaring oil costs and the effect of rising interest rates on the economy.

The Dow Jones industrial average closed up 10.66 points, or 0.1%, at 10,569.89. The Dow climbed nearly 82 points in morning activity before moving in and out of positive territory.

Broader stock indicators also ended slightly higher after giving up ground. The Standard & Poor’s 500 index gained 2.02 points, or 0.17%, to 1,221.73, while the Nasdaq composite index advanced 5.85 points, or 0.27%, to 2,141.41.

Stock trading volume was light -- typical for a late-summer session -- which tends to exaggerate the index swings.

“Higher oil prices, interest rates -- that puts downward pressure on price-to-earnings ratios,” said Charles H. Blood, senior financial markets analyst at Brown Bros. Harriman & Co. “The market is still struggling with this, but second-quarter earnings were good enough to offset that drop. That’s why you have this sort of erratic behavior.”

Crude oil futures inched up amid news that sabotage cut power to Iraq’s only functioning oil-export terminals early Monday, temporarily halting shipments. A barrel of light crude settled at $65.45, up 10 cents in New York trading.

U.S. Treasury yields barely budged Monday as the dearth of new economic data left investors with little to gamble on. The yield on the 10-year note was unchanged at 4.21%.

Reports on factory orders and consumer confidence are due this week. With the second-quarter reporting season almost finished, earnings for S&P; 500 companies rose 13.7%, up from the 6.6% growth predicted by analysts on July 5, according to data from Thomson Financial.

Alan Kral, who helps manage $750 million at Trevor Stewart Burton & Jacobsen Inc., said investors are looking for third- and fourth-quarter earnings that are up at least 10% over year-earlier figures. “That really opens up an opportunity on the upside for gains in the market,” he said.

In other market highlights:

* Monday’s spate of merger news offered some support to the market, which has been searching for signs of confidence in the economy. Takeover shopping is often a signal that companies are feeling optimistic about business in the coming months and years.

Eyetech Pharmaceuticals rallied $4.14, or 30%, to $18.13 after OSI Pharmaceuticals agreed to buy the company for $935 million in cash and stock. OSI shares dropped $8.85 to $31.92.

Shares of Canadian oil producer PetroKazakhstan jumped $8.35 to $53.75 after China National Petroleum said it would buy the company for $4.18 billion, or $55 a share.

And Dow Jones added $2.82, or 7.2%, to $42.01 for the best rally in the S&P; 500. The company’s controlling owner, the Bancroft family, has received three inquiries about an acquisition since an Aug. 15 New York Post article reported that some of them were pressing for a sale, family attorney Roy Hammer said.

Hammer declined to say which companies expressed interest. A British newspaper reported that likely bidders are the New York Times Co., News Corp. and Gannett.

* Maytag signed a formal agreement to be acquired by rival appliance maker Whirlpool for more than $1.7 billion after investment firm Ripplewood Holdings reportedly said it wouldn’t raise its offer for Maytag. Maytag dropped 2 cents to $18.69, and Whirlpool was down 35 cents to $81.48.

* Merck continued its decline after an unfavorable jury verdict Friday in the first lawsuit over its once-popular painkiller Vioxx. Lawyers for Merck, which plans to appeal the case, have said the jury award of more than $250 million would probably be reduced to about $26 million because of Texas laws that limited punitive damages. Merck’s shares slumped almost 8% after the decision, and slid an additional 17 cents to $27.89.

* A gauge of semiconductor companies rallied 1.5% for the biggest gain among 24 industry groups in the S&P; 500. Intel plans to announce today that it will use Research in Motion’s battery technology, financial news network CNBC reported. Intel rose 41 cents to $26.06, and Research in Motion, maker of the BlackBerry e-mail pager, climbed $4.21 to $77.49. Texas Instruments added 79 cents to $31.95.

* Shares of Warner Music Group climbed back to their initial public offering price for the first time, rising 14 cents to $17. The company reported rising sales early this month, and on Monday Chief Executive Edgar Bronfman Jr. said his firm plans to create a new “digital-only label,” in which artists who do not have enough material for an album would be able to release “clusters” of three or more songs every few months.