Investors drew support from big acquisitions announced before trading began, including deals to take credit card transaction processor First Data Corp. and media conglomerate Tribune Co. private. But gains were limited by the Institute for Supply Management's manufacturing index, which slipped more than economists projected in March. The index moved to a reading of 50.9 last month, compared to an expected reading of 51.0.

Also, putting pressure on technology stocks, the Semiconductor Industry Association said total chip sales in February fell to $20.09 billion from $21.48 in January due to seasonal weakness, lower manufacturing capacity and price cuts.

Wall Street has traded nervously the past few weeks on concerns about rising inflation and the overall health of the economy. On Friday, the major indexes finished the first quarter lower — with the Dow Jones industrials down 108 points in their feeblest performance since the second quarter of 2005.

St. Louis Federal Reserve President William Poole said in a speech to bankers in New York that inflation is still a "major concern." He said inflation levels could require more rate hikes, and that a U.S. recession remains conceivable. But Poole, whose comments have moved stocks in the past, had little lasting impact Monday.

"If you're listening to the Fed, this is just more of the same — I think the focus is going to turn from little bits of data on inflation to earnings very quickly," said Matt Kelmon, portfolio manager of the Kelmoore Strategy Funds. "The Fed just doesn't want everyone to get excited about a rate cut, and we'll see an even bias out of them for the next few months."

The Dow rose 27.95, or 0.23 percent, to 12,382.30. The benchmark index is now 404 points below its record close reached Feb. 20.

Broader stock indicators also rose slightly. The Standard & Poor's 500 index rose 3.69, or 0.26 percent, to 1,424.55, and the Nasdaq composite index edged up 0.62, or 0.03 percent, to 2,422.26.

Bonds moved lower after the ISM report showed slower growth amid accelerating price pressures. The yield on the benchmark 10-year Treasury note rose to 4.64 percent from 4.63 percent at Friday's close. The dollar was mixed against other major currencies, while gold prices rose.

Oil prices advanced slightly as investors speculated about how tensions between Iran and Britain could interrupt supply from the Middle East. A barrel of light sweet crude rose 7 cents to $65.94 on the New York Mercantile Exchange.

Arthur Hogan, chief market analyst at Jefferies & Co., said oil has been one concern weighing on markets. He believes the market continues to look for some kind of economic direction, while also reacting to corporate news.

"That's the battle we're going to have — are we starting the quarter with good company news or will we continue to be concerned about an economic slowdown?" he said. "That's the argument."

First Data spiked $5.55, or 21 percent, to $32.45 after Kohlberg Kravis Roberts & Co. agreed to take it private in a $29 billion deal. This is one of the largest private equity deals of the year, coming in second only to KKR's deal to buy energy company TXU Corp. for $31.8 billion.

Also going private is Tribune, which accepted a buyout offer from real estate investor Sam Zell in a deal valued at about $8.2 billion. Shares of the media company that owns the Chicago Tribune and the Los Angeles Times rose 70 cents, or 2.2 percent, to $32.81.

Web search leader Google Inc. is said to be interested in buying advertising placement firm DoubleClick in a deal worth about $2 billion, according to The Wall Street Journal. Microsoft Corp. was also reported to be interested in buying the company. Google rose 37 cents to $458.53, while Microsoft fell 13 cents to $27.74.

In other corporate news, Kraft Foods Inc. shares fell 81 cents, or 2.6 percent, to $30.96 after it was spun off from former parent Altria Group Inc. The maker of Marlboro cigarettes rose $2.32, or 3.5 percent, to $68.22.

Starwood Hotels & Resorts Worldwide Inc. rose $2.97, or 4.6 percent, to $67.82, after announcing Steven J. Heyer has resigned as chief executive and a director after the company's board lost confidence in his leadership. The company also reaffirmed its first-quarter and full-year guidance.

Home lenders were weak after New Century Financial Corp. filed for Chapter 11 bankruptcy, and M&T Bank Corp. said it expects first-quarter profit to be hurt by its mortgage business. M&T shares fell $9.88, or 8.5 percent, to $105.95. Countrywide Financial Corp. fell 91 cents, or 2.7 percent, to $32.73.

Apple Inc. shares rose 74 cents to $93.65 after it reached an agreement with EMI Group PLC to sell the record label's songs online without copy protection software. However, the deal did not include The Beatles catalog.

The Russell 2000 index of smaller companies gained 2.51, or 0.31 percent, at 803.22.

Advancing issues outnumbered decliners by about 5 to 3 on the New York Stock Exchange, where consolidated volume came to 2.80 billion shares, down from 2.81 billion shares on Friday.

Overseas, Japan's Nikkei stock average closed down 1.50 percent. Britain's FTSE 100 rose 0.12 percent, Germany's DAX index rose 0.29 percent, and France's CAC-40 rose 0.20 percent.

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