Stocks slumped to a mixed finish Monday as the dollar posted its second day of gains over concerns that Europe is on the edge of another bailout.
Investors believe that Ireland may seek help from its fellow members in the European Union as its economy sputters. The dollar also spiked in May when Europe bailed out Greece. Ireland's finances are under strain after the government bailed out five banks after the country's real estate boom collapsed.
The rising value of the dollar, which hurts U.S. exports, resulted in stocks paring their gains late in the day. Stocks had risen for most of the day following following a spike in corporate dealmaking and news that retail sales in October jumped to the highest level in seven months.
Consumer spending rose 1.2 percent last month thanks to higher demand for automobiles, the Commerce Department reported. The gain was nearly double what analysts were expecting. Shares of Ford Motor Co. rose 4.3 percent following the announcement.
Caterpillar Inc., the world's largest construction machinery maker, said it would buy mining equipment maker Bucyrus International Inc. for $7.6 billion in cash, a 32 percent premium over the company's closing price on Friday. Shares of Caterpillar rose 1 percent.
Data storage company EMC Corp. also announced that it had reached a deal to buy competitor Isilon Systems Inc. for $2.2 billion in cash. It is offering $33.85 per share, a 29 percent premium over its closing price on Friday.
The push for mergers and acquisitions is a good sign for investors, said Uri Landesman, the president of Platinum Partners, a hedge fund in New York City. "It's a statement that companies are moving out from under the bombshells of 2008 and 2009 and that they don't think there will be another disaster," he said.
Corporations are holding records amount of cash on their balance sheets. Using that cash to buy rivals or to expand into new areas could be a sign that companies are less concerned about the possibility that that economy will slide into another recession soon.
The Dow Jones industrial average rose 9.39, or 0.1 percent, to close at 11,201.97. It had been up as much as 88 points earlier.
The broader Standard & Poor's 500 index fell 1.46, or 0.1 percent, to 1,197.75, while the technology-focused Nasdaq composite index fell 4.39, or 0.2 percent, to 2,513.82.
Six out of the 10 industry groups within the S&P 500 index fell. Companies in the materials industry fell the most, down 0.9 percent. Financial companies posted the index's largest gains with a 0.4 rise. JP Morgan Chase gained 1.3 percent to become the top stock among the 30 companies that make up the Dow. Walt Disney's 1.3 fall made it the laggard.
In addition to Ireland's debt woes, investors are also worried about international pushback on the Federal Reserve's plan to buy $600 billion in Treasury bonds, which U.S. trading partners say will further weaken the dollar.
Yields for Treasury bonds rose for the third straight day, lifting interest rates to their highest level in four months. The 10 year Treasury bond's yield rose to 2.93 percent, the highest since before the Federal Reserve announced that it would spend $600 billion to buy bonds in an attempt to spur the economy.
The Fed's plan came under another round of criticism on Monday after economists, hedge fund investors and historians tied to Republicans called on the Fed to halt its effort. The group believes that the Fed's plan may result in rampant inflation and a weaker dollar.