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Stocks decline as investors weigh stimulus timing, deals

The markets were little changed on Monday as investors await comments later in the week from Federal Reserve Board Chairman Ben Bernanke and other economic news.

The Dow Jones Industrial Average fell 19.12 points to 15,335.28. The 0.12 percent decline followed another record-setting close for the blue chip index on Friday. The Nasdaq Composite Index declined 2.53 points to 3,496.43 and the S&P 500 Stock Index dipped 1.18 points to 1,666.29.

Bernanke is scheduled to meet with the Joint Economic Committee of Congress on Wednesday to discuss current economic conditions and future plans for monetary policy.

Gold moved higher Monday following seven consecutive sessions of declines. The metal gained $19.40 to $1,384.10 an ounce. Oil rose 69 cents to $96.71 a barrel.

Procter & Gamble Co. (NYSE: PG) and Coca-Cola Co. (NYSE: KO) retreated at least 1.2 percent as companies that make food, beverages and household products slumped. Yahoo! Inc. (Nasdaq: YHOO) climbed 0.2 percent after agreeing to buy blogging network Tumblr Inc. for $1.1 billion. Actavis Inc. (NYSE: ACT) rallied 1.3 percent as it reached a deal to acquire Warner Chilcott Plc (Nasdaq: WCRX). Exxon Mobil Corp. (NYSE: XOM) and Chevron Corp. (NYSE: CVX) gained more than 0.8 percent as energy shares surged.

“Some minor pullback should be expected after the steady gains we’ve achieved,” Eric Teal, chief investment officer at First Citizens BancShares Inc. (Nasdaq: FCNCA), which manages $5 billion in Raleigh, N.C., said in a phone interview. “I don’t think that we’re going to see any immediate tapering off of monetary policy, though we can expect from hawkish members or others outside the FOMC questioning the policy, which might lead to market volatility.”

The S&P 500 added 2.1 percent last week, its fourth straight weekly gain, as gauges of leading economic indicators and consumer sentiment beat estimates. The U.S. bull market has entered its fifth year, adding about $11.5 trillion in market value, according to data compiled by Bloomberg. The S&P 500 has surged 146 percent from a 12-year low in 2009, driven by better-than-estimated corporate earnings and three rounds of bond purchases from the Federal Reserve.

Stocks erased gains from earlier in the session after Fed Bank of Chicago President Charles Evans said the U.S. economy has improved “quite a lot” as the central bank maintains record stimulus. The question now is “how much confidence we have that the improvements that have been made will continue and be sustained,” said Evans, who holds a vote on the Federal Open Market Committee this year.

Dallas Fed President Richard Fisher said in an interview on CNBC that the odds favor dialing back the central bank’s purchase of $85 billion in bonds per month. He said he would have started tapering stimulus at the last FOMC meeting.

Some Fed officials in recent months have signaled they favor scaling back the quantitative-easing program in the next few months. Fed Chairman Ben Bernanke has said he would continue unprecedented stimulus until the jobless rate falls to 6.5 percent or inflation rises above 2.5 percent. The Fed publishes minutes of its last policy meeting on May 22, while Bernanke will testify that day on the economic outlook.

“Keep in mind we are at all-time highs so even a moderate cautious comment will be met with some selling,” Larry Peruzzi, senior equity trader at Cabrera Capital Markets LLC in Boston, wrote in an email. “Investors are looking for a reason to take profits.”

The Chicago Board Options Exchange Volatility Index, or VIX, rose 4.6 percent to 13.02. The equity volatility gauge, which moves in the opposite direction to the S&P 500 about 80 percent of the time, has slipped 28 percent this year.

Red Hat Inc. (NYSE: RHT) slipped 4.3 percent to $52.65, ending 12 days of consecutive gains. The largest seller of Linux operating- system software was cut to "market perform," an equivalent of "neutral," from "outperform" at BMO Capital Markets by equity analyst Karl Keirstead.

WPX Energy Inc. (NYSE: WPX) climbed 7 percent to $19.76. Taconic Capital Advisors LP disclosed a 6.39 percent stake in the natural gas and oil company and said it may seek ways to enhance shareholder value, according to a regulatory filing.

Chesapeake Energy Corp. (NYSE: CHK) added 2.6 percent to $20.80. The second-biggest U.S. natural-gas producer said Robert Douglas Lawler will become CEO from June 17. Lawler was senior vice president of international and deepwater operations at Anadarko Petroleum Corp. (NYSE: APC), Chesapeake said.

Apple Inc. (Nasdaq: AAPL) increased 2.2 percent to $442.93, climbing above its average price during the past 50 days.

About $10.2 billion of takeovers was announced Monday, bringing the total value of transactions so far this year to $330.2 billion, according to data compiled by Bloomberg.

Websense Inc. (Nasdaq: WBSN) jumped 29 percent to $24.76. The Internet-security company will be acquired by private-equity firm Vista Equity Partners in a deal valued at about $906 million. Websense is trying to transition from its roots blocking inappropriate websites in the workplace into a provider of broader online security services.

Bloomberg News contributed to this report.

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