updated 8/9/2005 9:22:06 AM ET 2005-08-09T13:22:06

Wall Street’s main stock indexes fell for a third straight session Monday amid oil prices, which soared to record highs, and a series of merger reports.

Major Market Indices

Wall Street retreated after oil prices jumped to a record on the New York Mercantile Exchange following the U.S. embassy’s warning that there was a “threat against U.S. government buildings in the kingdom.” It was the second alert from the embassy in two weeks.

Meanwhile, gasoline prices also hit a record high of $1.86 per gallon on the NYMEX, adding to the market’s gloom with heightened fears of a slowdown in consumer spending.

“Two thing are primarily at work: Oil prices are higher than people would like and we’re seeing a little profit taking,” said Joseph Lisanti, editor of Standard & Poor’s weekly newsletter, The Outlook. “We had a 3.6 percent rise in the S&P 500 in July. It was the best July since 1997, better than two-thirds of all Julys since 1928.”

Before oil surged, acquisition news catapulted stocks in the opening minutes of trading. E-Trade Financial Corp. and Quest Diagnostics Inc. said they are buying rivals in deals worth more than $1.6 billion combined, and a British newspaper reported that Cisco Systems Inc. may bid for cell-phone maker Nokia Corp .

Investors were also worried about Tuesday’s meeting of Federal Reserve policy makers, who are expected to raise the short-term federal funds rate by a quarter percentage point to 3.5 percent — the 10th hike since last summer.

The Dow Jones industrial average finished the day off 21.10 points, or 0.2 percent, while the broader Standard & Poor’s 500-stock index was down 3.29 points, or 0.3 percent. The Nasdaq composite index, full of technology stocks, gave up 13.52 points, or 0.6 percent.

Stock in companies with announced deals climbed. E-Trade rose $1.24 to $16.10; Quest rose $1.71 to $49.21. Quest, the nation’s top provider of medical tests, said it is planning to acquire LabOne Inc. in a $934 million deal that will expand Quest’s share of the testing market. E-Trade will buy Harrisdirect for $700 million .

The possibility of a deal involving Cisco and Nokia was reported by the British newspaper, The Business, which said technology infrastructure company Cisco is considering buying a wireless company, and that Nokia had been identified as the most likely target. Cisco fell 5 cents to $19.25; Nokia rose 88 cents to $16.08.

“The acquisition story helps get investors more invested in stocks and interested in stocks,” Waterman said. “There’s a lot of investors sitting on the sidelines now, particularly retail investors.”

The market for initial public offerings may also be warming up. Ruth’s Chris Steak House Inc. increased the size of its IPO to 13 million shares from 11.43 million. The move came after an IPO for Chinese Web search engine Baidu.com rose 354 percent on Friday.

Oil and gas producer Kerr-McGee Corp. rose $3.03 to $85.01 after The Wall Street Journal reported it is nearing a deal to sell its North Sea oil assets for about $3.5 billion. The report said a deal could be struck in the next few days as the company tries to reshape itself as a primarily domestic developer of oil and natural gas fields.

Whirlpool Corp. submitted a binding offer to acquire Maytag Corp. for $20 per Maytag share , up from an earlier offer of $18 a share and 43 percent higher than a deal Maytag had already agreed to with a private equity firm. Whirlpool rose $2.75 to $82.46; Maytag rose $1.60 to $18.58.

Delphi Corp. rose 7 cents to $5.03 after it said it will consider filing for bankruptcy protection and reported a second-quarter loss from a year-ago profit. Delphi, the nation’s biggest auto-parts maker continued to be hurt by the ailing domestic auto industry. It said Friday said it has begun to draw $1.5 billion from a $1.8 billion revolving credit facility. All three ratings agencies have downgraded its debt ratings to highly speculative levels.

Overseas, Japan’s Nikkei stock average rose 0.1 percent. In Europe, Britain’s FTSE 100 was up 0.6 percent, Germany’s DAX index rose 0.2 percent and France’s CAC-40 added 0.4 percent.

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


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