Stocks fell Monday as concerns about high oil prices and nervousness ahead of the Federal Reserve's decision on interest rates on Tuesday stifled Wall Street's enthusiasm over another round of merger deals.

The Dow Jones industrial average (search) was down 64.28 points, or 0.60 percent, to close at at 10,565.39. The Standard & Poor's 500 Index (search) was down 5.87 points, or 0.49 percent, to end at 1,183.78. The Nasdaq Composite Index (search) was down just 0.28 of a point, or 0.01 percent, to finish at 2,007.51.

Both the Dow average and the Standard & Poor's 500 closed at their lowest levels in about seven weeks. The Nasdaq inched down to a fresh closing low for the year, its lowest since November. Stocks, however, trimmed some earlier session losses.

"I think we have pretty cautious trade ahead of the FOMC," said Paul Cherney, chief market analyst at Standard & Poor's. "The market got worried about higher crude prices and the implications for inflation."

The Federal Open Market Committee (search) meets Tuesday and a quarter-point hike to 2.75 percent is expected. More important will be whether the Fed continues to assert that policy can be tightened at a "measured" pace. There has been some speculation that the "measured" word might be dropped.

Cherney thinks there could be a relief rebound after the Fed's decision Tuesday.

"If they remove the 'measured' pace, the knee-jerk reaction could be down, but then all the bears have to scratch their heads and think 'what's the worst bit of news we can get after this?'. Then I think we'll get a rebound in prices."

The market was looking ahead to inflation data, with the Producer Price Index (search) due Tuesday and the Consumer Price Index set for release Wednesday.

"People are fearful of higher rates," said Ted Oberhaus, manager of equity trading at Lord Abbett & Co.

Oil was also a concern, Oberhaus said. "It's going to be very difficult for equities to mount any kind of substantial rally with oil sitting at $57 a barrel."

U.S. crude futures for April delivery ended slightly lower, trimming earlier gains that took them above the $57 mark. April delivery crude, which expired at the close, settled down 10 cents at $56.62 a barrel.

While that helped stocks pare their losses by easing worries about higher corporate costs and slack consumer spending, energy stocks declined. Exxon Mobil Corp. (XOM) fell 0.8 percent, or 51 cents, to $62.14.

But Carnival Corp. (CCL), the world's biggest cruise operator, fell nearly 6 percent, or $3.24, to $51.59 after it said higher fuel costs would hurt results for the rest of this year.

Troubled automaker General Motors Corp. (GM) rose 3.7 percent, or $1.07, to $29.69. The Wall Street Journal reported that GM planned to slash its North American white-collar work force.

Technology companies were helped by a spate of deals, which one trader said boosted hopes of further consolidation.

Web-search service Ask Jeeves (ASKJ) jumped 18 percent, or $4.43, to $28.67 after IAC/InterActiveCorp (IACI) , the Internet conglomerate run by media mogul Barry Diller, said it plans to buy the company. IAC fell 3 percent, or 66 cents, to $21.63.

Meanwhile, SunGard Data Systems Inc. (SDS), a financial services technology company, surged 24.5 percent, or $6.12, to $31.07 after it said it is in talks to sell the company to an unnamed buyer.

Time Warner Inc. (TWX) fell 33 cents to $18.37 after the Securities and Exchange Commission charged the company with fraud for making misleading statements about its advertising revenues and subscriber base in its America Online division.

Among falling stocks were financial services companies, typically sensitive to rising interest rates. Citigroup Inc. (C) fell 2.3 percent, or $1.09, to $45.76 and Bank of America Corp. (BAC) shed 1.4 percent, or 64 cents, to $44.30.

Inamed Corp. (IMDC) added $1.97 to $68.21 Medicis Pharmaceutical Corp. made a $2.8 billion cash-and-stock offer for the rival drug maker. Medicis, known for its skin care treatments, slid $2.57 to $29.11.

Dow component American International Group Inc. (AIG) fell 2.2 percent, or $1.44, to $63.28 amid concerns about government probes into the insurance giant and the forced departure last week of Maurice Greenberg as chief executive.

Altria Group Inc. (MO) fell 1.9 percent to $63.50 after the U.S. Supreme Court rejected an appeal by Altria's Philip Morris USA in a California case involving $9 million in punitive damages awarded to a former longtime smoker who has lung cancer.

Schering AG (SHR) tumbled $11.75, or 15.1 percent, to $66 and Novartis AG (NVS) lost 91 cents to $47.41 as the companies' jointly developed colon cancer drug failed to show any statistical improvement in patients in a clinical trial. Rival Genentech Inc. (DNA), which already markets a colon cancer drug, surged $5.07, or 9.7 percent, to $57.58.

Trading was active, with 1.45 billion shares changing hands on the New York Stock Exchange, about the same as the 1.46 billion daily average for last year. About 1.63 billion shares were traded on Nasdaq, below the 1.81 billion daily average last year. Decliners outnumbered advancers on the New York Stock Exchange by about 12 to 5 and by about 8 to 7 on Nasdaq.

The Russell 2000 index of smaller companies was down 1.00, or 0.16 percent, at 621.57.

Overseas, Britain's FTSE 100 gained 0.21 percent, France's CAC-40 fell 0.44 percent, and Germany's DAX index was down 0.71 percent. Markets in Japan were closed for a national holiday.

Reuters and the Associated Press contributed to this report.