updated 4/25/2006 9:52:36 AM ET 2006-04-25T13:52:36

Stocks declined modestly Monday, as a weakening U.S. dollar and a mixed batch of earnings reports prompted cautious investors to cash in on last week’s gains. Oil prices also fell sharply, as energy traders took profits following futures’ recent run-up.

Major Market Indices

Disappointment over lower profit at Xerox Corp. and a reduced 2007 forecast from TD Ameritrade Holding Corp. overshadowed strong results from Caterpillar Inc. However, investors largely ignored the earnings news as they readied for Federal Reserve Chair Ben Bernanke’s congressional testimony and the gross domestic product reading later this week.

A steep drop in oil futures gave investors some relief following oil’s recent climb to a record $75 a barrel. The market’s trends suggest oil prices will stabilize or retreat further in the coming weeks, said Rick Pendergraft, an equity trader for Schaeffer’s Investment Research.

“Looking at some of the data, I can see oil moving sideways or maybe lower,” said Pendergraft, who added that many oil-related stocks are overbought. “To me, it was everybody jumping on board at the same time. They didn’t think $75 could be taken out.”

Persistent worries about Iran’s nuclear arms program nonetheless kept the market on edge. A barrel of light crude sank $1.84 to settle at $73.33 on the New York Mercantile Exchange.

The Dow Jones industrial average was down 11.13 points, or 0.10 percent, at Monday’s close, having surged to a six-year high last week. The broader Standard & Poor’s 500-stock index was off 3.17 points, or 0.24 percent, while the technology-rich Nasdaq composite index gave up 9.48 points, or 0.40 percent.

Bonds rebounded somewhat after their recent slide, with the yield on the 10-year Treasury note slipping to 4.99 percent from 5.01 percent late Friday. The U.S. dollar plunged against the Japanese yen and was flat against major currencies; gold backed off a 25-year high.

Wall Street faced another session with no new government data to give traders clues about the economy’s health, but this week brings critical readings of new home sales, jobless claims, labor costs and GDP growth. Bernanke is also scheduled to speak before the Joint Economic Committee Thursday.

Wall Street’s major indexes finished higher last week , boosted by signs that the Fed could soon end its series of interest rate increases. However, the continued rise in energy and consumer prices have investors still fearful of inflation.

Ed Peters, chief investment officer at PanAgora Asset Management, said many on Wall Street appeared to mistake last week’s Fed comments as a signal it would soon stop raising rates. Peters said the central bank instead plans to keep hiking rates while looking for hints of softening economic growth, such as in Friday’s first-quarter GDP report.

“Just about everything that has to do with the economy will be looked over carefully and reacted to,” Peters said. “But right now good news is not good for the market. At the same time, bad news isn’t good either.”

Consumer products maker Kimberly-Clark Corp. said its profit fell by more than a third as it paid higher prices for raw materials. But without one-time items, earnings beat estimates by a penny. Kimberly-Clark gained $1.33 to $58.52.

Although increased trading and the acquisition of TD Waterhouse’s securities unit helped more than double earnings at TD Ameritrade, a weakened 2007 outlook sent its stock falling $2.09 to $19.41.

Dow component American Express Co.’s income fell after logging charges from last year’s spin-off of Ameriprise Financial . American Express dropped 47 cents to $51.78.

Xerox lost 80 cents to $14 after saying its profit declined modestly last quarter . Caterpillar fell 49 cents to $77.38 despite its earnings growing 45 percent on an uptick in sales.

Cendant is considering a sale of its Orbitz Web site and other ticketing operations — rather than spinning it off — after the company received unsolicited offers of up to $4.5 billion for the business, according to media reports. Cendant gained 64 cents to $17.49.

Overseas, Japan’s Nikkei stock average tumbled 1.22 percent. In Europe, Britain’s FTSE 100 slipped 0.55 percent, Germany’s DAX index lost 0.26 percent and France’s CAC-40 was lower by 0.59 percent.

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