Oil futures traded above $59 a barrel after the U.S. Department of Energy released data showing inventories of crude fell 1.58 million barrels for the week. The drop, while lower than expected, initially rattled traders and sent stocks sliding; however, they soon recovered most of their lost ground.

"The market is searching for meaning out of the news and isn't ready to forecast where they think oil prices will be," said John Caldwell, chief investment strategist for McDonald Financial Group, part of Cleveland-based KeyCorp. "It's a reactive situation."

A barrel of light crude settled at $58.09, down 95 cents on the New York Mercantile Exchange.

Worries linger on Wall Street that high oil prices could accelerate inflation, as businesses raise their own prices to absorb rising costs. United Airlines, a unit of UAL Corp., said today it was raising fares on most domestic and international flights by 3 percent, effective immediately, because of rising oil prices.

"People are myopically focused on higher energy prices and are ignoring the generally good fundamentals for the U.S. equity market," said Steve Neimeth, a portfolio manager at AIG SunAmerica Asset Management.

Investors nervous about a possible economic slowdown in the United States bid bonds higher worldwide. U.S. Treasuries rose, with the yield on the 10-year note falling to 3.94 percent from 4.05 percent late yesterday.

The Dow Jones industrial average fell 11.74, or 0.11 percent, to 10,587.93.

Broader stock indicators were up. The Standard & Poor's 500 index was up 0.27, or 0.02 percent, at 1,213.88, and the Nasdaq composite index rose by 0.96, or 0.05 percent, to 2,092.03.

The U.S. dollar fell against the euro. Gold prices fell as well.

Stocks have traded in a narrow range for weeks in anticipation of the Federal Reserve Open Market Committee meeting June 29 and 30. Investors expect the Fed to raise rates for the ninth time since last year at the meeting; what they're waiting for are signs of the Fed's longer term plans for rates.

Wall Street is also waiting to see if corporate second-quarter earnings live up to the strong earnings in the first half of the year.

Ameritrade Holding Corp. said it was rejecting a takeover offer from E-Trade Financial Corp. and would instead acquire rival online brokerage TD Waterhouse from Toronto-Dominion Bank. Ameritrade's stock climbed $3.05 to $17.87, while Toronto-Dominion rose 54 cents to $44.15.

Ford Motor Co. said after markets closed yesterday it is cutting another 1,7000 management workers on top of 1,000 cuts it already announced. The company also reduced its full-year profit outlook for the second time in two months. Ford slumped 49 cents to $10.68.

Gannett Co., the nation's largest newspaper company, said growth in second quarter earnings will likely be lower than expected. Nonetheless, the stock fell 12 cents, to $74.10.

Earnings for embattled investment bank Morgan Stanley fell 24 percent in the second quarter and came in short of analyst expectations. The company blamed the drop on difficult market conditions and high legal expenses from high-profile lawsuits against the firm. Morgan Stanley dropped 45 cents to $50.52.

The news from Ford and Morgan Stanley had little effect on trading.

Investors expected layoffs from Ford after months of bad news from the company and its rival General Motors Corp. Likewise, Gannett's guidance came as no surprise because other newspaper companies have said their advertising sales are not as robust as hoped, Caldwell said.

Advancing issues led decliners issues by roughly 8 to 7 on the New York Stock Exchange. Preliminary consolidated volume on the NYSE came to 1.81 billion shares, up from 1.29 billion on yesterday.

The Russell 2000 index of smaller companies was up 2.41, or 0.38 percent, at 643.45.

Overseas, Japan's Nikkei stock average rose 0.51 percent. Britain's FTSE 100 was up 0.34 percent, Germany's DAX index was up 0.25 percent, and France's CAC-40 was up 0.18 percent.