NEW YORK – The Dow average and Nasdaq edged higher Monday, helped by gains in shares of Intel Corp (INTC). and IBM on investors' optimism about after new microchip technology.
The Dow Jones industrial average was up 3.76 points, or 0.03 percent, at 12,490.78. The Standard & Poor's 500 Index was down 1.56 points, or 0.11 percent, at 1,420.62. The Nasdaq Composite Index was up 5.60 points, or 0.23 percent, at 2,441.09.
But caution before the Federal Reserve's monetary policy meeting this week limited those gains, while a sell-off in energy shares on a sharp drop in oil prices helped push the Standard & Poor's 500 index lower for the day.
Intel and IBM announced a breakthrough last week in solving an electricity leakage problem in microchips.
Analysts also said Tuesday's wider release of Microsoft Corp.'s (MSFT) Vista operating system underpinned the broader technology sector's advance in Monday's regular trading session.
"The focus is on what's important to the Fed going forward, including the recent strength we've seen in economic data," said Arthur Hogan, chief market analyst at Jefferies & Co. in Boston.
"If we continue to see strong economic data, there's a better chance the Fed raises interest rates instead of lowering them, and that's contrary to what we are thinking coming into the year."
Intel's stock gained 1.8 percent, or 36 cents, to $20.89 and ranked as the No. 1 advancer in the Nasdaq 100. Intel was also among the Dow's biggest gainers, which included International Business Machines Corp., up 1.1 percent, or $1.09, at $98.54 on the New York Stock Exchange, and Hewlett-Packard Co. (HPQ), up 1.8 percent, or 73 cents, at $42.42 on the NYSE.
In contrast, Microsoft dipped 0.2 percent, or 7 cents, to $30.53 on the Nasdaq.
The Fed's Open Market Committee is expected to leave rates unchanged at the end of a two-day meeting Wednesday. Investors are nervous that policy-makers may signal rates will not fall any time soon, or that the Fed's policy-makers may even hint that the central bank is not done yet with raising rates.
Meanwhile, news of mergers and possible deals lifted investor sentiment.
Shares of Bristol-Myers Squibb Co. (BMY) rose 4.7 percent, or $1.22, to $27.43 — its biggest percentage gain since September — after a report that the U.S. company, known for its cancer-fighting drugs, might be taken over.
Merrill Lynch & Co. Inc. (MER) said it will buy First Republic Bank for $1.8 billion.
Merrill Lynch's shares fell 2.3 percent, or $2.14, to $92.39, while First Republic's stock soared 40 percent, or $15.33, to $53.63, both in NYSE trading. First Republic was the Big Board's largest percentage gainer.
Exxon Mobil Corp. (XOM) fell 0.6 percent, or 41 cents, to $73.20. The stock was among the biggest drags on the Dow industrials and the S&P 500 as U.S. crude oil for March delivery fell $1.41 to settle at $54.01 a barrel.
On the Nasdaq, shares of wireless chip developer Qualcomm Inc. (QCOM) slid 1 percent, or 36 cents, to $37.15 after news that a federal jury in San Diego has said that Broadcom did not infringe two of Qualcomm's patents related to video encoding.
In other deals, shares of Altiris Inc. surged 20 percent, or $5.41, to $32.55 on the Nasdaq after Symantec Corp.
said it had agreed to buy the company in a deal worth about $830 million. . Symantec shares fell 1.4 percent, or 25 cents, to $17.52, also in Nasdaq trading.
Trading was moderate on the New York Stock Exchange, with about 1.55 billion shares changing hands, below last year's estimated daily average of 1.84 billion, while on Nasdaq, about 1.99 billion shares traded, below last year's daily average of 2.02 billion.
Advancing stocks outnumbered declining ones by a ratio of about 6 to 5 on the NYSE and by about 3 to 2 on Nasdaq.