Stocks advanced for most of the session, then pulled back modestly in the final minutes of trading.

Investors' appeared to be waiting for the Fed to make the next move. Policymakers are widely expected to cut interest rates by a quarter point on Wednesday, then leave them steady for the balance of the year to help ward off inflation.

The session's modest moves came despite one of the most active days for acquisitions in almost three months. The biggest deal was the Warren Buffett and candy maker Mars Inc. offer to buy Wm. Wrigley Jr. Co. for about $23 billion in cash. Meanwhile, billionaire Kirk Kerkorian plans to make an offer that would expand his stake in Ford Motor Co. to 5.6 percent, saying he sees signs the automaker's turnaround plan is working.

This helped to offset disappointment in the market that struggling Continental Airlines Inc. said it would not pursue a combination with another carrier right away. It was a surprising move after weeks of speculation it would join with United Airlines to create the world's biggest carrier.

But investors appeared focused on the Fed.

"Investors are holding their breath for the Fed, and not even these high-profile deals are shaking people off of their hands," said Jack A. Ablin, chief investment officer at Harris Private Bank. "The direction of Fed policy hangs in the balance, and there are people like me that hope the central bank quits sooner rather then later."

The Dow Jones industrial average fell 20.11, or 0.16 percent, to 12,871.75.

Broader indexes were mixed. The Standard & Poor's 500 index slipped 1.47, or 0.11 percent, to 1,396.37, and the Nasdaq composite index rose 1.47, or 0.06 percent, to 2,424.40.

Bond prices edged higher after suffering big losses last week. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.82 percent from 3.87 percent late Friday.

Crude spiked to near $120 a barrel in overnight trading amid supply concerns, then gave up some gains to settle up 23 cents at $118.75 a barrel on the New York Mercantile Exchange.

The dollar was mixed against other major currencies, while gold prices were higher.

In corporate news, Kerkorian's investment company, Tracinda Corp., said it plans to offer $8.50 per share in cash for up to 20 million additional shares of Ford. Ford rose 71 cents, or 9.5 percent, to $8.21.

Continental Airlines shares fell 26 cents to $16.96 after the airline announced it wasn't interested in completing a deal. The decision stunned United's parent, UAL Corp., which had been in advanced talks with Continental and expected to complete a deal by early May. United shares fell 40 cents, or 2.6 percent, to $14.81.

Some observers saw the dealmaking as an encouraging sign that companies are still willing to make mergers and acquisitions happen - and that many might do so while valuations still look cheap.

"What is happening is that people are thinking the Fed is keeping the economy going, and this is a good opportunity to do some inexpensive shopping," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York. "There has been a bit of a concern over the past few months that we haven't been seeing enough M&A."

In other corporate news, health insurer Humana said that increased Medicare Advantage membership helped drive its first-quarter profit above Wall Street's expectations. The company also raised its forecast for the year. The stock rose $1.50, or 3.3 percent, to $46.38.

Visa Inc., the world's largest credit and debit card processor, said after the closing bell Monday that its earnings increased 28 percent in the first quarter as customers charged more to their cards. Investors appeared disappointed that Visa's results weren't stronger. The stock fell more than 3 percent in after-hours trading, after rising 53 cents to finish the regular session at $75.63.

The Russell 2000 index of smaller companies advanced 3.49, or 0.48 percent, to 725.37.

Advancing issued outpaced decliners by about a 3-to-2 margin on the New York Stock Exchange, where volume came to 1.21 billion shares compared with 1.45 billion shares traded Friday.

Overseas, Japan's Nikkei stock average rose 0.22 percent. Britain's FTSE 100 closed down 0.02 percent, Germany's DAX index added 0.42 percent, and France's CAC-40 rose 0.69 percent.

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