updated 12/19/2006 7:17:23 AM ET 2006-12-19T12:17:23

Wall Street fell for the first time in four sessions Monday, as concerns about the technology and energy sectors overshadowed some $81 billion in takeover activity.

Major Market Indices

Stocks spent most of the day in positive territory as investment bankers squeezed in more deals before year end, and helped keep a floor under share prices for most of the day.

Among the bigger deals announced, pharmacy benefits manager Express Scripts Inc. said it was offering to buy rival Caremark RX for about $26 billion. Realogy Corp., which owns the Coldwell Banker real estate franchise, said it agreed to be acquired by private equity firm Apollo Group for about $6.65 billion.

“What is driving mergers and acquisitions is strong stock prices, that gives companies the currency to go out and do deals,” said Steven Bernard, director of M&A market analysis at investment bank Robert W. Baird. “This still means there’s a lot of deals out there, and we expect the strength we’re seeing will continue into 2007.”

There has been an unprecedented amount of acquisition activity in 2006. With only 13 days left in the year, announced deals have already amounted to almost $4 trillion worldwide, according to market analysis company Dealogic.

However, the shopping spree by companies and private equity firms Monday was not enough to stave off losses during the session. Investors sold off shares of ExxonMobil Corp. due to a sharp drop in crude, and questioned the sustainability of profits at Google Inc.

The Dow Jones industrial average closed the seesaw session down 4.25 points, or 0.03 percent. The Dow traded above Friday’s record close of 12,445.52 for most of the session. The broader Standard & Poor’s 500-stock index closed down 4.61 points, or 0.32 percent, and the Nasdaq composite index declined 21.63 points, or 0.88 percent.

Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.59 percent from 4.60 percent late Friday. The dollar was mixed against other major currencies, while the price of gold fell.

Oil prices fell after rallying last week when it was announced inventories were lower than expected, which could increase the price for fuel. A barrel of light sweet crude fell $1.22 to $62.21 on the New York Mercantile Exchange.

This sent shares of Dow component ExxonMobil down $1.79, or 2.3 percent, to $75.51. Rival Chevron Corp. shed $2.05, or 2.7 percent, to $73.33. British Petroleum PLC declined $1.13 to $66.75.

Google had its biggest drop in more than a month, tumbling $17.50, or 3.6 percent, to $462.80. Analysts remain concerned that the Internet search leader cannot maintain the kind of earnings power it has seen in prior quarters, according to a report in the Wall Street Journal.

Rival Yahoo Inc. fell 60 cents, or 2.2 percent, to $26.30. Both search engines were among the biggest decliners on the Nasdaq.

The decline outstripped enthusiasm about the barrage of M&A deals announced before the opening bell. Investors originally seen the deals as an indicator of corporate confidence going into the new year.

Among the bigger deals was Express Scripts, which launched a hostile bid to acquire larger competitor Caremark RX. This could scuttle a competing offer from CVS drug store chain. Express Scripts rose $1.31 to $69.97, while Caremark surged $6.28, or 10.5 percent, to $55.58.

Realogy, which was one of four divisions spun off in July from Cendant Corp., rose $4.90, or 19.2, to $30.40. The company announced on Sunday that it agreed to be taken private.

Wyndham Worldwide Corp., another former division of Cendant, also rose on speculation it might be targeted by a private equity firm. Shares added $1.08 cents, or 3.4 percent, to $32.40.

Harrah’s Entertainment Inc., the world’s largest casino company, also agreed to a $16.7 billion buyout offer from two private equity groups, said a person with knowledge of the negotiations. Shares surged $2.68, or 3.4 percent, to $82.18. The deal values Harrah’s at $16.7 billion.

Medical devices maker Biomet Inc. fell 41 cents to $41.59 after it agreed to be acquired by a private equity consortium for about $10.9 billion in cash. Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts and the Texas Pacific, along with one of Biomet’s founders, Dane A. Miller all pooled in to beat a previous offer by the U.K.’s Smith & Nephew PLC.

“The presence of private equity is influencing the market in a major way, even to the point where Smith & Nephew is beaten out of a transaction to buy Biomet,” said Howard Horowitz, director of research for Water Island Capital, which manages the Arbitrage Fund. “This indicates that these firms are able to beat out a buyer you’d think would have the upper hand because of synergies.”

Icos Corp. shares added 50 cents to $33.85 after drug maker Eli Lilly & Co. bumped up its offer price for the biotech drug maker by 6 percent to $2.3 billion. Eli Lilly fell $1.29, or 2.4 percent, to $53.23.

ElkCorp, which manufactures roofing and building products, said it agreed to a takeover by the private equity firm Carlyle Group for about $827 million in cash. Shares rose $2.96, or 8.3 percent, to $38.81.

Overseas, Japan’s Nikkei stock average finished with a gain of 0.28 percent. At the close, Britain’s FTSE 100 was down 0.20 percent, Germany’s DAX index was up 0.13 percent and France’s CAC-40 fell 0.20 percent.

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