Wall Street pulled back Monday after Microsoft's decision to withdraw its bid for Yahoo and as oil prices rose to more than $120 a barrel...

Share story

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

Microsoft had offered $47.5 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, or 0.68 percent, to 12,969.54.

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

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.

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 $120.36 a barrel on the New York Mercantile Exchange before pulling back to settle up $3.65 at a record $119.97.

“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.”

Concerns about the impact of energy prices had slipped to the background on Wall Street in recent weeks, as investors focused more on earnings, the economy and on what the Federal Reserve might do about interest rates. When the Fed cut rates by a quarter point last Wednesday, it reminded Wall Street that inflation remains a priority along with the uncertain economy.