Stocks fell Monday as crude oil prices rose to a record high, reigniting concerns about corporate profits and offsetting a flurry of merger deals, both real and rumored.

The Dow Jones industrial average (search) slipped 21.10 points, or 0.20 percent, to end at 10,536.93. The Standard & Poor's 500 index (search) edged down 3.29 points, or 0.27 percent, to finish at 1,223.13. The technology-laced Nasdaq Composite Index (search) fell 13.52 points, or 0.62 percent, to close at 2,164.39.

For the first time since March 12, the Nasdaq ended lower for the fourth session in a row. Both the Dow and the S&P 500 closed lower for the third straight session for the first time since June 27.

"The market would have done better if oil prices were lower but we didn't go into a freefall. Still, we are in a corrective mode and the breadth was fairly negative," said Elliot Spar, market strategist with Ryan Beck & Co. "The problem in the home building stocks continued today."

Wall Street reacted after U.S. crude oil for September delivery settled up $1.63 at $63.94 a barrel after earlier hitting a record $64 on the New York Mercantile Exchange (search), the highest since the oil futures contract started trading in 1983, amid fears of militant attacks in Saudi Arabia, the world's biggest oil producer.

While higher oil prices usually weigh on stocks as they could hurt corporate profits and curb consumer spending, they boost shares of energy companies.

Shares of oil company and Dow component Exxon Mobil Corp. (XOM) rose 1.3 percent, or 76 cents, to $58.85. The American Stock Exchange index of energy companies rose 2 percent.

"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."

Investors were also worried about Tuesday's meeting of Federal Reserve (search) 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.

Wall Street will be watching closely Tuesday for changes to the Fed's policy statement indicating it will step up its tightening regime. A policy change is unlikely, but analysts are split between those who feel the Fed's rate hikes have been too aggressive and those who think the central bank isn't doing enough to stave off inflation.

"It isn't that the Fed strategy isn't clear, but it's whether the Fed strategy will work," said John P. Waterman, chief investment officer at Rittenhouse Asset Management.

Interest-rate concerns dragged on the shares of housing finance company Fannie Mae (FNM), down 1.4 percent, or 76 cents, at $54.20, and Dow component Citigroup Inc. (C), which lost 0.8 percent, or 33 cents, to $43.30. Higher interest rates increase borrowing costs and weigh on profits.

Shares of home builders also slipped, with Pulte Homes Inc. (PHI) falling 3.6 percent, or $3.20, to $86.75, and KB Home (KB) dropping 2.8 percent, or $2.05, to $72.45.

The yield on the benchmark 10-year U.S. Treasury note ended close to a four-month high at 4.44 percent. The 10-year note's yield is used in setting mortgage rates, and higher rates may slow the purchasing of new homes.

Stock in companies with announced deals climbed, with E-Trade (ET) rising $1.24 to $16.10, and Quest (DGX) up $1.71 at $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 (CSCO) and Nokia (NOK) was reported by 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 lost 4 cents to $19.25; Nokia rose 14 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."

(CVX) (COP)

Fast-food chain McDonald's Corp. (MCD) climbed 2.7 percent, or 84 cents, to $32.14 after the Dow component said it posted a stronger-than-expected 4.9 percent gain in global July sales.

But shares of China's largest Web search company Baidu.com Inc. (BIDU), which more than quadrupled in value in their U.S. market debut Friday, fell 5.8 percent, or $7.04, to close at $115.50 on Nasdaq.

Whirlpool Corp. (WPL) , the largest U.S. appliance maker, sweetened its offer for Maytag Corp. (MYG) to $1.6 billion, or $20 per share. Whirlpool rose 3.5 percent, or $2.75, to $82.46, and Maytag soared 9.4 percent, or $1.60, to $18.58.

Oil and gas producer Kerr-McGee Corp. (KMG) 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.

Despite falling to a second-quarter loss from a year-ago profit and saying it will consider filing for bankruptcy, shares of Delphi Corp. (DPH) rose 7 cents to $5.03. The nation's biggest auto-parts maker continues to be hurt by the ailing domestic auto industry, and said Friday 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.

On the NYSE, about 1.36 billion shares changed hands, below last year's daily average of 1.46 billion, and on Nasdaq, 1.49 billion shares traded, below last year's daily average of 1.81 billion.

The Russell 2000 index of smaller companies fell 3.19, or 0.48 percent, to 659.60.

Overseas, Japan's Nikkei stock average rose 0.11 percent. In afternoon trading, Britain's FTSE 100 was up 0.56 percent, Germany's DAX index was up 0.22 percent, and France's CAC-40 was up 0.44 percent.

Reuters and the Associated Press contributed to this report.