U.S. stocks barely budged on Monday as caution before the Federal Reserve's interest rate policy meeting on Wednesday offset a pullback in crude oil prices and fresh merger activity.

The Dow climbed to its highest close since January 2000 and passed the 11,600 threshold in intraday trading. The S&P hit its highest since February 2001, before it turned lower.

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The Dow industrials inched up to a fresh six-year closing high, but some investors held back to consolidate earlier gains. Stocks rallied last week after weaker-than-expected jobs data showed the Federal Reserve may have room to mark a pause in its nearly 2-year-long cycle of interest rate increases.

Gains in semiconductor stocks, which rose after brokerage upgrades for Intel Corp., supported the Nasdaq Composite Index.

After the bell, the mood soured further as Dell Inc. (DELL), the world's top maker of personal computers, warned first quarter earnings and revenue will be below previous forecasts. For details, see.

"Late last week the markets were really pricing in the idea that the Fed would signal it is going to pause after this rate hike, but I think the closer the meeting gets, the more cautious the market will be," said Chip Hanlon, president of Delta Global Advisors Inc. in Huntington Beach, California.

The Fed is widely expected to raise benchmark short-term interest rates by a quarter percentage point on Wednesday, but investors will be focused on the U.S. central bank's accompanying statement for clues about the outlook for rates.

Crude for June delivery fell 42 cents to $69.77 a barrel, on hopes that tension over Iran's nuclear ambitions will ease after Iran's president sent a letter to President Bush.

"Some of the political risk in oil is coming out," Hanlon said. "Lower oil prices, overall, should be a longer-term benefit to the economy."

But crude's fall pressured energy and oil services stocks, weighing on the S&P 500 index. Shares of Exxon Mobil Corp., the world's largest publicly traded oil company, fell 0.5 percent to $63.71 on the NYSE.

On the merger front, shares of Golden West Financial Corp., the No. 2 U.S. savings and loan, rose after Wachovia Corp., the No. 4 U.S. bank, said it will buy the firm for $25.5 billion. .

Thermo Electron Corp. will acquire Fisher Scientific International Inc. in a stock-for-stock reverse merger, valuing Fisher Scientific at about $10.6 billion, the two companies said on Monday. .

Golden West rose almost 6.2 percent to $74.90, but Wachovia shares fell 6.7 percent to $55.42 amid concern it may have overpaid for Golden West and was adding mortgage exposure as the lending industry was slowing.

Thermo fell 2.3 percent to $38.54 on the NYSE, while Fisher added 3 percent to $75.95.

On Nasdaq, Intel shares rose 3.1 percent to $20.11 after two brokerages raised ratings on the chipmaker's stock. American Technology Research raised Intel to a "buy," while Caris & Co. raised its rating to "above average."

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