Stocks drifted lower Monday as record-breaking crude oil prices and weak profit outlooks marred a traditionally strong period for stock-buying. Investors were also waiting for the Federal Reserve's meeting on interest rates

The Dow Jones industrial average (search) fell 7.06, or 0.07 percent, to 10,290.78 after dropping nearly 290 points Thursday and Friday combined. The Standard & Poor's 500 index (search) slipped 0.88, or 0.07 percent, to 1,190.69, and the Nasdaq composite index (search) declined 8.07, or 0.39 percent, to 2,045.20.

"Typically, the four trading sessions ahead of the Fourth of July holiday are strong days for U.S. stocks," said Scott Fullman, chief strategist at Investec (US) Inc., an institutional broker dealer in New York. "However, given the rising price of crude oil, this may not be such a positive year."

A barrel of crude oil climbed as high as $60.95 before closing at $60.54 a barrel, up 70 cents, on the New York Mercantile Exchange (search). The increase came amid concerns that supplies would not meet demand, worries about refining capacity and news that Iran's new president would be focusing on its domestic market instead of exports.

Analysts said prices could climb even higher, but for the moment, Wall Street didn't seem particularly worried.

"The market seems to be shrugging off oil a little bit," said Brian Gendreau, investment strategist at ING Investment Management. "Perhaps there's a feeling that the selloff Friday was overdone."

High oil prices boost the cost of corporate expenses including shipping and many commodity chemicals, while also eating into consumers' discretionary spending.

"Oil is a convenient excuse but earnings disappointments are also an issue," said Elliot Spar, market strategist with Ryan Beck & Co. "We are breaking support levels. If it becomes apparent that the Nasdaq could close below 2,050 and the S&P below 1,190, I think we will have selling in the last hour."

The Fed's Open Market Committee (search) is widely expected to raise rates for the ninth time in a year when it meets Wednesday and Thursday, but investors are waiting to see policymakers' assessment of the economy, to be issued at the end of the meeting.

Until the Fed's intentions are clear, investors are likely to do very little, said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "Is this the ninth inning or are we going into extra innings?" he said.

Shares of Apple Computer Inc. (AAPL) and key suppliers for its iPod music player fell after a rival cut its sales outlook and a report forecast competition from mobile phones with built-in music players. Apple was down 2.6 percent to $36.78 on Nasdaq, where shares in SigmaTel Inc., a supplier for iPod Shuffles, fell nearly 16 percent to $18.39.

Several companies issued warnings Monday.

International Paper Co. (IP) fell $1.02 cents to $31.43 after the company said second-quarter earnings would miss estimates because of weaker paper and packaging sales. Cardinal Health Inc. fell $4.08 to $56.43 after the company said investments in research and development and infrastructure would push 2006 earnings well below estimates.

And athletic apparel maker Nike Inc. (NKE) fell $3.58 to $85.77 after the company's earnings rose at a lower rate in the fourth quarter than the previous three quarters. The company also did not offer a 2006 earnings outlook.

Bonds were up slightly, with the yield on the 10-year Treasury note falling to 3.90 percent from 3.92 percent late Friday. The dollar was unchanged against the euro. Gold prices were unchanged.

In Monday's stock trading, some industries were strong, while others faltered. "It's still a sector story," Ablin said. "You've got very calm water, with a lot of stirring underneath the surface."

Energy and utility stocks were doing well, thanks to increasing oil prices, but technology, health care and consumer staples lost ground, due to fears of an economic slow down.

TiVoInc. (TIVO) rose 18 cents a share to $6.98 on news Vice Chairman Tom Rogers will replace Mike Ramsay as the company's president and chief executive, beginning July 1. Rogers, the former chairman and CEO of media publisher Primedia Inc., joined TiVo in 1999 and became vice chairman of the board in October 2004. Ramsay, TiVo's co-founder, announced plans to step down from his post in January after seven years in the position.

Walgreen Co. (WAG), the nation's largest drugstore chain, posted a 20 percent increase in third-quarter profits Monday, driven by strong generic drug sales and better margins in its digital photofinishing business. Its stock rose $1.47, to $45.85.

Oil major Exxon Mobil Corp. (XOM) rose 1.5 percent to $59.01 and Chevron Corp. (CVX) gained 0.7 percent to $57.09.

The Russell 2000 index of smaller companies was down 2.10, or 0.33 percent, at 628.31.

Overseas, Japan's Nikkei stock average fell 1.06 percent. Britain's FTSE 100 was down 0.70 percent, Germany's DAX index was down 0.93 percent, and France's CAC-40 was down 1.00 percent.

Reuters and the Associated Press contributed to this report.