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A flood of acquisitions activity wasn’t enough to awaken the bulls on Monday as Wall Street took a step backwards amid weakness in the technology and industrial sectors ahead of this week’s avalanche of economic reports.

Today’s Markets

The Dow Jones Industrial Average fell 39.21 points, or 0.38%, to 10174.41, the Standard & Poor's 500 dropped 4.33 points, or 0.40%, to 1067.36 and the Nasdaq Composite sank 20.13 points, or 0.92%, to 2159.63. The FOX 50 lost 1.81 points, or 0.23%, to 772.85.

Monday started off promising as the Dow climbed more than 90 points at the opening bill amid enthusiasm for the latest developments on the M&A front that suggest confidence in the economy and stock valuation. For example, a consortium led by a Chinese private equity fund is reportedly mulling a bid for fertilizer giant Potash (NYSE:POT), Hewlett-Packard (NYSE:HPQ) launched a bidding war for data storage company 3Par (NYSE:PAR) and brewer SABMiller is in talks to purchase the beer operations of Australia’s Foster’s Group.

However, the early rally proved to be fleeting and stocks suffered a wave of late-day selling, leaving all three major indexes solidly in the red. The last-minute pullback didn't appear to be triggered by any new developments, but it came ahead of a cluster of economic reports slated for release later this week, including data on existing home sales on Tuesday and new home sales on Wednesday. 

“Without anything concrete in terms of macro news and away from the takeover chatter, it was easy for the bears to continue what they did last week: sell any up move,” said Michael James, senior equity trader at Wedbush Morgan Securities. “For now, the bears are in control. There isn’t a lot of enthusiasm for equities right now.”

Half of the Dow's 30 components landed in the red, led by economically-sensitive Caterpillar (NYSE:CAT) and tech giants Cisco Systems (NASDAQ:CSCO) and H-P. The index's best performers were defensive plays Wal-Mart (NYSE:WMT) and Merck (NYSE:MRK). 

The Nasdaq Composite pulled back by nearly 1% as technology stocks like (NASDAQ:BIDU) and Intuit (NASDAQ) suffered modest losses. 

The choppy day on Wall Street comes after the Dow slumped almost 100 points last week, its second straight week in the red. 

The industrial sector was the biggest weight on the markets on Monday, sinking more than 1%. Individual stocks like Honeywell (NYSE:HON) and Cummins Engine (NYSE:CMI) posted even steeper declines. Tech stocks were also weak, as evidenced by a 2.5% decline for bellwether Cisco. 

Traders had little interest in those economically-sensitive sectors ahead of Tuesday's housing report, which is expected to show existing home sales slid in July to a rate of 4.72 million units. Later in the week data on durable goods orders, new home sales and jobless claims are slated for release. 

The latest M&A developments were headlined by Potash, which formally rejected BHP Billiton’s (NYSE:BHP) $39 billion hostile takeover bid and said it has engaged in talks with other potential suitors. At the same time, The Wall Street Journal reported China’s Hopu Investment Management is leading a group that includes investors from the U.S., Asia and Canada that is studying the feasibility of a bid for Potash.

Meanwhile, shares of 3Par surged another 42% after H-P unveiled a $24-a-share bid to acquire the technology company -- a 33.3% premium to the $1.15 billion deal Dell (NASDAQ:DELL) offered a week earlier. The Dell bid had placed a hefty 87% premium on 3Par.

In other M&A news, SABMiller and Asahi are reportedly in talks to buy rival Foster’s Group’s beer operations, which are valued at more than $10 billion. Also, Campbell Soup (NYSE:CBP) is considering making a $2.3 billion break-up bid for the U.K.’s United Biscuits, London’s Sunday Times reported.

In the commodities complex, crude oil sank 72 cents a barrel, or 0.98%, to $73.10. Gold slid 30 cents a troy ounce, or 0.02%, to $1,226.90.

Corporate Movers

American International Group (NYSE:AIG) repaid $4 billion to the U.S. government after the giant insurer’s aircraft-leasing business was able to successfully tap the capital markets by raising $4.4 billion in debt. The $3.95 billion payment by AIG is the largest cash repayment it has made thus far.

Lowe’s (NYSE:LOW) slumped 2% even after Goldman Sachs slapped a buy rating on the home improvement retailer on the thinking that improved margins will drive the company’s growth. According to Dow Jones Newswires, Goldman upgraded Lowe’s to “buy” from “neutral” and forecasted the retailer’s EPS to rise 18% in the third quarter and 31% in the fourth quarter.

3M (NYSE:MMM) plans to double its 2010 acquisition allotment to $2 billion. The maker of LCD televisions and Post-It Notes said its previous estimate of $1 billion in acquisitions is too low and that the latest goal depends on "how successful we are in capturing targets." 

Global Markets

The U.K.'s FTSE 100 jumped 0.76% to 5234.84, France's CAC 40 gained 0.77% to 3553.23 and Germany's DAX advanced 0.10% to 6010.91.

In Asia, Tokyo's Nikkei 225 sank 0.68% to 9116.69, Hong Kong's Hang Seng lost 0.44% to 20889.00 and China's Shanghai Composite fell 0.11% to 2639.37.