. NEW YORK — Wall Street pulled back today after Microsoft's decision to withdraw its bid for Yahoo and as oil prices rose to a record...

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NEW YORK — Wall Street pulled back today after Microsoft’s decision to withdraw its bid for Yahoo and as oil prices rose to a record over $120 a barrel.

Microsoft had offered $43.7 billion to buy Yahoo, but scrapped the bid late Saturday after the software maker and the Internet provider could not agree on a sale price. The failed deal came as a disappointment to Wall Street, as merger-and-acquisition activity tends to boost shareholder value, and also signals to the broader market that corporate America is optimistic about the future.

The Dow Jones industrial average fell 88.66 to 12,969.54.

Microsoft, one of the 30 Dow stocks, fell 16 cents to close at $29.08. Boeing, another Dow stock, added 23 cents to close at 85.92

Broader stock indicators also declined. The Standard & Poor’s 500 index fell 6.41 to 1,407.49, and the Nasdaq composite index fell 12.87 to 2,464.12.

A jump in oil prices raised concerns that inflation could force consumers, who account for more than two-thirds of the economy, to cut their spending on discretionary items. Crude-oil futures for June delivery surged to a new trading high of $120.21 a barrel on the New York Mercantile Exchange before pulling back. The jump followed news of an attack on a Nigerian oil facility.

“Energy is a very important piece,” said Russell Croft, portfolio manager at Croft Leominster Investment Management in Baltimore, referring to the mood of both investors and consumers. “It’s the price at the pump, it’s what people read about.”

Despite their concerns about inflation, investors briefly took some encouragement from a key reading on the U.S. service sector. The Institute for Supply Management said its April index of nonmanufacturing activity rose to 52 from 49.6 in March. A reading above 50 signals economic expansion; analysts had expected the figure would come in at 49.3, according to economists surveyed by Thomson Financial/IFR.

Bond prices rose as stocks dropped. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.83 percent from 3.86 percent late Friday.

Gold prices also climbed, while the dollar traded mixed against other major currencies.

In general, first-quarter earnings reports and economic data have been coming in weak, but were not as poor as many on Wall Street had braced for. Investors have lingering concerns, however — not only is the housing market still weak, but commodities besides oil remain near record levels, threatening consumers’ discretionary spending and their ability to pay off debt.