updated 5/15/2007 7:19:48 AM ET 2007-05-15T11:19:48

Wall Street closed narrowly mixed Monday after investors, uneasy about the government’s upcoming inflation data, cashed in some of their gains from the market’s months-long rally.

Major Market Indices

Blue chip stocks managed a modest increase, thanks to DaimlerChrysler AG’s announcement that it will sell 80.1 percent of money-losing Chrysler Group to Cerberus Capital Management LP, a private equity group, for $7.4 billion. The deal, which lifted stocks in the automotive sector, undoes a 1998 merger aimed at creating a global auto giant.

The news buoyed the Dow Jones industrial average briefly to a new trading high, but the overall stock market dipped, with many investors wary ahead of Tuesday’s release of the Labor Department’s Consumer Price Index, a key measure of inflation.

“People are waiting to get a better read on some of the pricing data,” said Jack Caffrey, equities strategist at J.P. Morgan Private Bank. “It does seem like there’s a bit of a holding pattern.”

The market expects the April CPI to have risen 0.5 percent, slower than in March, but it anticipates the core figure — which strips out food and energy prices — will increase 0.2 percent, a slightly larger jump than March’s increase of 0.1 percent. Data indicating that consumer costs are rising much faster could frustrate investors hoping for an interest rate cut from the Federal Reserve later in the year.

The Dow finished with a gain of 20.56 points, or 0.15 percent, after rising in the morning to a trading record of 13,383.76. The broader Standard & Poor’s 500-stock index gave up 2.70 points, or 0.18 percent, and the Nasdaq composite index lost 15.78 points, or 0.62 percent.

Bonds fell slightly, as many investors stayed on the sidelines ahead of Tuesday’s economic data, which will include the National Association of Home Builders’ housing market index. The yield on the benchmark 10-year Treasury note edged up to 4.69 percent from 4.68 percent late Friday.

The dollar was mixed against other major currencies; gold prices fell.

DaimlerChrysler rose $2.12, or 2.6 percent, to $84.12. Other automakers advanced as well, boosted by the Chrysler deal: General Motors, one of the 30 Dow components, rose $1.16, or 3.9 percent, to $30.62. Ford Motor Co. rose 34 cents, or 4.1 percent, to $8.71.

Other takeover news on Monday included Cardinal Health’s agreement to buy Viasys Healthcare Inc. for $1.42 billion. Viasys rose $11.63, or 36.9 percent, to $43.18, and Cardinal Health rose 12 cents to $69.19.

Merger-and-acquisition activity has played a big role in the stock market’s surge over the past several months, as investors consider it a good sign that corporate America is faring well amid the nation’s economic slowdown.

But caution ahead of Tuesday’s data dampened Monday’s takeover excitement. Tuesday will not only bring inflation and housing reports, but also quarterly financial results — notably from DaimlerChrysler, and Dow components Wal-Mart Stores Inc. and Home Depot Inc.

Last week, same-store sales figures suggested that consumer spending, which accounts for two-thirds of total economic activity, is waning. Wal-Mart reported Thursday that April’s U.S. sales decline was its worst monthly slide since the world’s largest retailer began reporting same-store sales results in 1980.

“I think right now the deals going on in the market are helping more than the consumer,” said Neil Massa, equity trader at John Hancock Funds.

The stock market is not as dependent on a strong consumer as gross domestic product is, noted Caffrey. But any negative surprises going forward could cause a sell-off in stocks, considering how far they have climbed in such a short period of time. The Dow has hit 21 record closes since the beginning of the year.

“The volatility should be higher than it has been. Ultimately, we think at year-end things will be higher than they are today, but there will be bumps along the way,” Caffrey said.

The average U.S. retail gasoline price climbed to a record high of $3.07 a gallon, according to AAA, surpassing levels seen after Hurricane Katrina battered the Gulf Coast.

Crude oil rose 9 cents to $62.46 a barrel on the New York Mercantile Exchange.

Overseas, Japan’s Nikkei stock average rose 0.71 percent. Britain’s FTSE 100 lost 0.16 percent, Germany’s DAX index dropped 0.26 percent and France’s CAC-40 dipped 0.40 percent.

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