NEW YORK (AP) - Stocks slumped to a weak finish yesterday as lingering worries about the economy overcame optimism from a fresh round of corporate dealmaking.

Stocks had an early lift after Hewlett-Packard Co. bid 33 percent more than rival Dell Inc. for a data storage provider, but the gains faded quickly.

The Dow Jones industrial average was up as much as 91 points in early trading but turned mixed for much of the day. A slump in the final half-hour of trading left the Dow with a loss of 39 points.

Despite the positive deal news, a number of worries about the economy are keeping a lid on the market, especially reluctance among companies to create jobs. Stocks had a two-day sell-off late last week after first-time claims for unemployment benefits jumped to their highest level since November.

"Companies are not hiring because they don't know the rules of the game," said. Frank Ingarra, co-portfolio manager of Hennessy Funds. "When you don't know the rules, you pack up and go home."

Mr. Ingarra said companies are hesitant to hire because of uncertainty surrounding costs tied to recently passed financial regulation and health care reform. The possibility of rising taxes also has companies worried about consumption, he said.

In other deal news, Potash Corp. of Saskatchewan Inc. rejected BHP Billiton's $38.5 billion offer to acquire the fertiliser company, and HSBC Holdings said it was in talks to buy a controlling stake in Nedbank Group Ltd. of South Africa from Old Mutual for as much as $6.8 billion.

According to preliminary calculations, the Dow Jones industrial average lost 39.21 or 0.4 percent, to close at 10,174.41.

Other major stock indexes also ended lower. The Standard & Poor's 500 index fell 4.33, or 0.4 percent, to 1,067.36, while the Nasdaq composite index lost 20.13, or 0.9 percent, to 2,159.63.

Falling stocks outpaced gaining ones three to two on the New York Stock Exchange. Trading volume was very light at 865 million shares.

Bond prices fell. The yield on the 10-year Treasury note, which moves opposite to its price, fell to 2.60 percent from 2.62 percent late on Friday. That yield helps set interest rates on mortgages and consumer loans.

"People are focused on the head winds more than the tail winds," said Walter Gerasimowicz, chief investment officer at Meditron Asset Management. He said investors are overlooking historically low interest rates and signs of corporate strength, choosing instead to focus on disappointing economic data.

Reports are due this week on the housing market, durable goods orders, consumer sentiment and a revision to second-quarter gross domestic product.

Housing remains especially weak following the expiration of the government's tax credit earlier this year. Reports on existing and new home sales are due out today and tomorrow.

Tomorrow's durable goods order will be examined for signs that a slowdown in manufacturing was only temporary. A regional manufacturing report on Thursday about the Mid-Atlantic region showed activity shrank, spooking investors. Manufacturing had shown the most consistent growth throughout the year.

The University of Michigan also reports its second reading on consumer sentiment for the month.

Hewlett-Packard shares fell 81 cents to $39.04, while 3Par rose $8.05, or 44.6 percent, to $26.09. Dell fell 13 cents to $11.94.

Overseas, Britain's FTSE 100 rose 0.8 percent, Germany's DAX index climbed 0.1 percent, and France's CAC-40 rose 0.8 percent. Japan's Nikkei stock average fell 0.7 percent.