Indexes fall, led by tech and oil; Oracle off late

NEW YORK, Dec 19 (Reuters) US stocks fell yesterday as investors took profits by selling some tech shares like Apple Computer Inc and Google Inc, while they worried about the sustainability of the rally that has driven the major indexes up sharply since July.

In late November, Apple and Google hit record highs.

A drop of nearly 2 percent in oil prices hurt energy shares such as Exxon Mobil Corp., which was the biggest drag on both the Dow and the S&P 500. The sell-off in the oil and tech sectors offset stocks' earlier gains after at least $82 billion in corporate takeovers were announced.

''The market has not had a correction in so long ... Techs have been the leaders and that's where the gains have been, so those are going to be the first ones that sell,'' said Richard Williams, director of equity research at interdealer broker ICAP in New York.

''From my perspective, it is nervousness about Christmas and it is hedge funds not wanting to lose anything 10 days before they book their bonuses.'' The Dow Jones industrial average slipped 4.25 points, or 0.03 percent, to end at 12,441.27. The Standard & Poor's 500 Index declined 4.61 points, or 0.32 percent, to finish at 1,422.48. The Nasdaq Composite Index dropped 21.63 points, or 0.88 percent, to close at 2,435.57.

Earlier, the Dow touched a record intraday high of 12,490.70 before turning lower.

Citigroup Inc. was the leading gainer in both the blue-chip Dow average and the broad S&P 500 and limited their declines after Merrill Lynch raised its rating on the stock to ''buy'' from ''neutral.'' Citigroup also was the most heavily traded name on the New York Stock Exchange.

Shares of Citigroup, the parent of the No. 1 U.S. bank in terms of assets, rose 2.5 percent, or $1.37, to close at $55.44 on the Big Board.

FIRST GOOGLE FALLS, THEN ORACLE Shares of Web search leader Google Inc. suffered the biggest tumble in a month, falling 3.6 percent, or $17.50, to $462.80 on the Nasdaq, after The Wall Street Journal said its earnings growth may stall.

Google was the second-biggest decliner in the Nasdaq 100 in Monday's session. In late November, Google's stock topped $500 for the first time, climbing to $513.

Apple Computer Inc. was the heaviest weight on the Nasdaq 100, falling 2.6 percent, or $2.25, to $85.47. Apple's stock is up about 20 percent year to date. In late November, Apple's stock hit an all-time high at $93.159.

In another bad sign for tech, shares of Oracle Corp. fell 1.7 percent to $17.60 in electronic trading after the closing bell as analysts said the business software maker's revenues from new software applications licenses were less than expected.

Oracle's drop after the bell was in contrast to its performance during the regular session, when it bucked the trend and rose 1.3 percent, or 23 cents, to close at $17.91 on Nasdaq. Oracle was the biggest advancer in the Nasdaq 100 during regular trading.

DOWNSIDE OF A MILD DECEMBER Falling oil prices hit energy shares as traders worried that mild U.S. weather was curbing demand for heating oil.

Shares of Exxon Mobil dropped 2.3 percent, or $1.79, to close at $75.51 on the NYSE.

U.S. crude oil for January delivery fell $1.22, or 1.9 percent, to settle at $62.21 a barrel on the New York Mercantile Exchange.

The CBOE Oil Index was down 2.6 per cent.

''We got off to a fast start with all the buyout action, but then a combination of oil price declines and oil industry downgrades pulled down the stocks,'' said Rob Morgan, investment strategist at Janney Montgomery Scott in Philadelphia.

IT'S MONDAY AT THE APOLLO Among Monday's mega-deals, pharmacy benefits manager Express Scripts Inc. offered to buy rival Caremark RX for about $26 billion.

The offer threatened to disrupt a deal brokered last month with drugstore chain CVS Corp.

Private equity firms Apollo Management and Texas Pacific Group were close to making a deal to buy Harrah's Entertainment Inc., the world's largest casino operator, sources familiar with the matter said.

Caremark shares jumped 10.5 per cent, or $5.28, to $55.58, while CVS shares fell 1.7 per cent, or 51 cents, to $30.01, both in NYSE trading.

Harrah's stock gained 3.4 per cent, or $2.68, to $82.18, also on the NYSE.

Trading was moderate on the New York Stock Exchange, where about 1.50 billion shares changed hands, below last year's daily average of 1.61 billion.

On the Nasdaq, about 1.97 billion shares were traded, above the 1.80 billion daily average last year.

Decliners beat advancers by a ratio of about 2 to 1 on the NYSE, while on the Nasdaq, about seven stocks fell for every three that rose.

REUTERS PKS BST0527