Stocks slip on oil, drugs; Apple, Amex drop late

By Kristina Cooke

NEW YORK (Reuters) - Stocks slipped on Monday, as oil turned higher after last week's sharp drop and Merck and Schering-Plough hurt the pharmaceuticals sector.

But dismal results after the bell from a raft of companies, including American Express (AXP.N: Quote, Profile, Research, Stock Buzz), Apple (AAPL.O: Quote, Profile, Research, Stock Buzz) and Texas Instruments (TXN.N: Quote, Profile, Research, Stock Buzz) set an uglier tone for Tuesday.

Merck's (MRK.N: Quote, Profile, Research, Stock Buzz) and Schering-Plough's (SGP.N: Quote, Profile, Research, Stock Buzz) shares fell further in extended trade after they reported results. During the regular session, their shares had dropped after their lucrative shared cholesterol-fighting drug failed a clinical trial.

The price of oil dampened the mood as it rose more than $2 to end above $131 a barrel, adding to concerns about the impact of higher fuel costs on consumer spending. Oil's rise came on the heels of its biggest weekly decline ever. The S&P retail index fell 1.7 percent.

Bank stocks added to last week's gains during Monday's session and kept the broader market's losses in check, after Bank of America joined its rivals Wells Fargo (WFC.N: Quote, Profile, Research, Stock Buzz), JPMorgan Chase (JPM.N: Quote, Profile, Research, Stock Buzz) and Citigroup (C.N: Quote, Profile, Research, Stock Buzz) in reporting unexpectedly strong results.

"The Merck news is specific to that sector -- you also have oil gaining again, which is hurting retailers and the broader market," said Robert Francello, head of equity trading for Apex Capital hedge fund in San Francisco.

The Dow Jones industrial average fell 29.23 points, or 0.25 percent, to 11,467.34. The Standard & Poor's 500 Index dipped 0.68 of a point, or 0.05 percent, to 1,260. The Nasdaq Composite Index slipped 3.25 points, or 0.14 percent, to 2,279.53.

BAD NEWS AFTER THE BELL