Stocks Flat; Wall Street's on Inflation, Fed Watch

U.S. stocks finished little changed Monday as investors' reluctance to take big positions before inflation data and the Federal Reserve's decision on interest rates later this week outweighed the boost that energy companies' shares got from rising oil prices.

The Dow Jones industrial average ended down 5.77 points, or 0.05 percent, at 11,555.00. The Standard & Poor's 500 Index was up 1.31 points, or 0.10 percent, to finish at 1,321.18. The Nasdaq Composite Index inched up 0.16 of a point, or 0.01 percent, to close at 2,235.75.

Crude prices rose after suffering their steepest slump in more than a decade last week. U.S. crude oil for October delivery climbed as high as $64.45 a barrel before giving up some of those gains to settle at $63.80, up 47 cents, or 0.7 percent from Friday's close.

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The rise in oil prices lifted energy stocks like Exxon Mobil Corp. (XOM), which buoyed the S&P 500, while the Nasdaq eked out a tiny gain as tech stocks advanced. For the Nasdaq, Monday marked its seventh straight session of gains.

"It was a little bit of a shock when oil prices popped up earlier today, but the market held up pretty well and for all practical purposes, ended the day unchanged," said Charles Lieberman, chief investment officer of Advisors Capital Management in Paramus, New Jersey.

Exxon Mobil rose 2.6 percent, or $1.65, to $66.30 on the New York Stock Exchange, while oil field services provider Schlumberger Ltd. gained nearly 4.6 percent, or $2.56, to $58.84.

Volume was light as investors were waiting to see Tuesday's data on the August producer price index, which could give further information on the pace of inflation and the outlook for interest rates before the Fed's policy-making meeting Wednesday.

"There are plenty of people who think inflation is not yet something that has been resolved and the Fed has an unchanged monetary policy bias, but whether or not it can sustain that bias remains to be seen," Lieberman added.

On the New York Stock Exchange, about 1.50 billion shares changed hands, below last year's daily average of 1.61 billion shares. On the Nasdaq, though, about 1.97 billion shares traded, exceeding last year's daily average of 1.80 billion.

Decliners narrowly outnumbered advancers on the NYSE by 1,694 to 1,627, while on the Nasdaq, there were 1,525 shares that fell, and 1,486 shares that rose.

Investors expect the Fed to hold rates steady at its meeting Wednesday, but they are worried that inflation could lead the Fed to raise interest rates again by year's end. For the stock market, higher rates tend to be a negative influence because they raise borrowing costs for corporations and can curb consumer spending.

Home Depot Inc. (HD) was one of the biggest drags on the Dow, falling 1.7 percent, or 64 cents, to $36.58 after Credit Suisse lowered its investment rating on the largest home improvement retailer.

Shares of First Data Corp. (FDC) slid 7.6 percent, or $3.40, to $41.25 after its money transfer unit, Western Union, which it plans to spin off, said the U.S. immigration debate should weigh on operating income growth through 2007.

Helping the Nasdaq, Applied Materials Inc. (AMAT) shares climbed 3.4 percent, or 58 cents, to $17.78, after the supplier of chip-making tools said it bought $2.5 billion worth of its own stock in an accelerated stock-repurchase program.

Freescale Semiconductor Inc. (FSL) rose 5.7 percent, or $2.10, to $39.26. The chip maker said Friday it agreed to be bought for $17.6 billion by a private equity consortium.

Semiconductor maker Intel Corp. (INTC) rose despite a brokerage downgrade. Intel shares added 0.7 percent, or 14 cents, to $19.65 on the Nasdaq.

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