NEW YORK – U.S. stocks skidded Monday as resurgent economic worries and a jump in oil prices outweighed investors' excitement about a proposed bid for Texas power company TXU Corp. (TXU) which would be the largest private-equity buyout ever.
The Dow Jones industrial average declined 15.22 points, or 0.12 percent, to end at 12,632.26. The Standard & Poor's 500 Index slipped 1.82 points, or 0.13 percent, to finish at 1,449.37. The Nasdaq Composite Index was down 10.58 points, or 0.42 percent, at 2,504.52.
Crude oil prices climbed as Iran and the United Nations squared off over Tehran's nuclear program, adding to concern about higher energy costs and inflation, which could hurt corporate profits.
Investors also tried to lock in profits from the stock market's most recent run-up after a media report that former Federal Reserve Chairman Alan Greenspan said a U.S. recession was possible by the end of the year.
Gold prices rose, getting closer to the psychologically significant level of $700 an ounce, reflecting investors' nervousness about the West's dispute with Iran.
"The market's tired and when you're in an overextended market, investors weren't too happy to hear the former Federal Reserve chairman say a recession is possible," said Al Goldman chief market stategist at A.G. Edwards in St. Louis.
"The proposed TXU leveraged buyout is the biggest in history. Everybody should like that, but it didn't do the market a lot of good."
Stocks had opened higher after TXU agreed to be bought for $31.8 billion by a group led by private equity firms Kohlberg Kravis Roberts & Co.and Texas Pacific Group.
But the market quickly gave up its gains as investors sold technology stocks and shares of interest-rate-sensitive financial services companies, on worries that higher oil prices could lead to inflation and higher interest rates, which would hurt corporate profits.
"The market is concerned about the slowdown in the economy and the slowdown in earnings," said Milton Ezrati, senior economic strategist at Lord Abbett & Co. in Jersey City, New Jersey.
Wireless chip maker Qualcomm Inc. (QCOM) slid 1.6 percent, or 71 cents, to $42.65. The stock was the biggest negative influence on the Nasdaq 100.
Interest-rate-sensitive financial stocks also lost ground, with Citigroup falling nearly 2 percent to $52.73 and rival Morgan Stanley sliding 3 percent to $78.51. Citigroup was the S&P 500's top decliner.
U.S. crude oil for April delivery rose 25 cents to settle at $61.39 a barrel on the New York Mercantile Exchange.
The jump in oil prices boosted shares of energy companies such as Exxon Mobil Corp. (XOM), which was up 0.2 percent, or 18 cents, at $75.40 on the New York Stock Exchange.
Shares of large manufacturers, such as Boeing Co. (BA), fell on worries that higher oil prices would hurt companies' profits and borrowing capability.
Boeing dropped 1.5 percent, or $1.35, to $88.93 on the NYSE and dragged the most on the Dow.
On the merger front, the stock of Texas power company TXU was the S&P 500's second-biggest gainer as investors viewed the deal activity as a sign that stock prices are attractive and more big deals could follow.
Including debt, the price tag for TXU is about $45 billion, which would make it the largest private equity deal ever. Its stock shot up 13.2 percent, or $7.91, to $67.93 on the NYSE and ranked near the top of the Big Board's list of biggest percentage gainers.
Shares of other utility companies rose after the TXU news. NRG Energy Inc. , the second-largest power generator in Texas after TXU, gained 6.7 percent, or $4.23, to $67.75.
Limiting the broader market's decline was Merck & Co. (MRK), which was the top percentage gainer in the Dow and the S&P 500 on news that a competitor's drug may face a year's delay due to a request by U.S. regulators for more data.
The stock climbed 3.6 percent, or $1.54, to $44.48.
Volume was moderate on the New York Stock Exchange, where about 1.56 billion shares changed hands, below last year's estimated daily average of 1.84 billion shares. On the Nasdaq, about 1.92 billion shares traded, below last year's daily average of 2.02 billion.
On the NYSE, decliners just barely outnumbered advancers, with 1,657 stocks falling and 1,650 issues rising. On the Nasdaq, about three stocks fell for every two that rose.