updated 5/2/2006 7:59:28 AM ET 2006-05-02T11:59:28

Wall Street’s interest rate anxiety sent stocks moderately lower Monday after comments from Federal Reserve Chairman Ben Bernanke compounded investors’ concerns about surging oil prices and a weak U.S. dollar.

Major Market Indices

Stocks had traded in positive territory for most of the session, lifted by an upbeat sales report from Wal-Mart Stores Inc. and a raft of solid economic data on industrial activity, construction and consumer spending. But the market took a late-day dive following a CNBC report that said Bernanke is worried about media and investor speculation that the Fed is done raising interest rates in its long-running battle against inflation.

Bernanke told a congressional panel Last week that the central bank could pause — but not necessarily stop — its string of rate hikes as it keeps a close watch on the U.S. economy.

Although the day’s better-than-expected economic numbers gave investors some reassurance that the economy is expanding at a healthy pace, the bond market fretted about higher interest rates and sent bond yields climbing. Oil prices also leaped almost $2 a barrel amid continued tension over Iran’s nuclear arms program.

Earlier, investors reacted positively to a Commerce Department report that personal income rose 0.8 percent in March as spending gained 0.6 percent, topping estimates for both figures to add 0.4 percent. Other data showed an unexpected upswing in manufacturing , as well as construction spending growth that was more than twice what economists predicted.

The day’s better-than-forecast economic numbers assured Wall Street that the economy continues to expand at a healthy pace, although the data did raise some concerns about the ability to control price increases in the coming months, said Michael Gregory, a senior economist for BMO Nesbitt Burns.

“Still, the inflation performance from where we are and considering the length of this economic expansion has been terrific,” Gregory said. However, “talk of pausing from the Federal Reserve might have been a little premature.”

The Dow Jones industrial average gave up its early gains and finished the day down 23.85 points, or 0.21 percent, while the broader Standard & Poor’s 500-stock index was down 5.43 points, or 0.41 percent. The technology-rich Nasdaq composite index declined 17.78 points, or 0.77 percent.

Crude oil futures advanced as continued political tension over Iran’s nuclear arms program stoked the energy market’s supply concerns.

Wall Street shrugged off inflation signs in the Commerce Department’s spending report. Core prices — excluding volatile food and energy costs — rose 0.3 percent after rising 0.1 percent the month before.

The department also said March construction spending swelled 0.9 percent, compared with forecasts for 0.4 percent. Elsewhere, the Institute for Supply Management’s April manufacturing index gained 2.1 points to 57.3, while economists saw a 0.2-point drop.

Wal-Mart jumped 90 cents to $45.93 after the discount retailer said its sales at stores open at least a year grew 6.8 percent in April, better than the 4 percent to 6 percent it had predicted.

Boeing agreed to buy aircraft parts and services supplier Aviall Inc. for $1.7 billion in cash. The $48-per-share deal is a 27 percent premium to Aviall’s Friday closing price. Boeing rose 41 cents to $83.86, and Aviall surged $9.26 to $46.96.

Internet service provider Level 3 is acquiring regional telecommunications company TelCove Inc. for $637 million in stock and $445 million in cash. Level 3 is also assuming $155.5 million of TelCove’s debt. Level 3 rose 32 cents to $5.72.

A group of investors offered almost $5.8 billion to acquire food service provider Aramark, sending its shares leaping $5.79 to $33.90. The $32-per-share deal was a 14 percent premium to Aramark’s Friday closing price.

Tyson Foods Inc., the world’s largest meat processor, said it fell to a $127 million loss last quarter, hurt by an oversupply of meat and charges from closing plants. Tyson rose 11 cents to $14.71.

Overseas, Japan’s Nikkei stock average rose 0.12 percent. European markets were closed for the May Day holiday.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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