US stocks trade lower after Microsoft pulls Yahoo bid

Wall Street pulled back Monday as investors digested Microsoft Corp.'s decision to withdraw its bid for Yahoo Inc. and oil prices again approached $120 a barrel. The Dow Jones industrial average at times fell more than 100 points.

Microsoft had offered $43.7 billion to buy Yahoo Inc., 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.

A jump in oil prices raised concerns about inflation that could force consumers to cut back their spending on discretionary items. Crude oil futures for June delivery rose $3.17 to $119.49 a barrel on the New York Mercantile Exchange, boosted by news of an attack on a Nigerian oil facility. Oil had spiked more than $3 a barrel on Friday, and many analysts believe the commodity will surge back above its record near the $120-a-barrel level.

But investors did briefly take 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.

In late morning trading, the Dow Jones industrial average fell 107.39, or 0.82 percent, to 12,950.81.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 8.80, or 0.63 percent, to 1,405.01, and the Nasdaq composite index fell 12.59, or 0.51 percent, to 2,464.40.

(Agencies)