The Nasdaq closed lower and ended eight straight days of gains on Monday while the Dow and S&P 500 ended flat as optimism faded over China's move to tame its growth.

The lightly traded session came as some technical indicators suggested a near-term pullback could be in the cards. About 7.32 billion shares traded on the New York Stock Exchange, the American Stock Exchange and the Nasdaq, well below the year's daily average of 8.62 billion.

Stocks earlier had risen as optimism China would not aggressively head off growth boosted energy and materials stocks. Companies that sell oil, like Chevron Corp , and those that make mining equipment, like Caterpillar Inc , drove the Dow higher. At the close, both Caterpillar and Chevron were up 1.5 percent or more. The PHLX oil service index <.OSX> rose 1.3 percent.

Investors had feared China would raise interest rates to slow growth, but instead it merely increased the amount of extra capital top banks must hold, a less severe move by the world's second-largest economy.

Even though isn't fueling us 100 percent, if it was to tighten, that would mean less strength in a weak recovery here, said Jeffrey Friedman, senior market strategist at Lind-Waldock in Chicago.

Healthcare stocks jumped briefly on news that a Virginia judge invalidated a key part of the March healthcare overhaul championed by President Obama, but these shares quickly fell back. After rising as much as 1.6 percent, the Morgan Stanley Healthcare Payor Index <.HMO> slipped 0.3 percent. Shares of health insurer Aetna rose 1 percent.

The Dow Jones industrial average <.DJI> gained 18.24 points, or 0.16 percent, to end at 11,428.56, well off its intraday high of 11,480.03. The Standard & Poor's 500 Index <.SPX> inched up a mere 0.06 of a point, or 0.00 percent, to finish at 1,240.46. But the Nasdaq Composite Index <.IXIC> was down 12.63 points, or 0.48 percent, to close at 2,624.91.

The S&P 500 reached another high for the year on Monday, advancing to an intraday peak at 1,246.73. The index's steady climb since breaching 1,228 -- a key retracement of the 2007-2009 bear market losses -- has been judged a sign of further gains, even as the relative strength index suggests stocks are nearing an overbought condition.

We've had a decent run up over the last week or

so and the market started out strong, but we saw a bit of profit-taking at the end, said Giri Cherukuri, head trader at Oakbrook Investments LLC, in Lisle, Illinois. The news about part of the health care bill being struck down, was a negative but I'm sure that's just part of a long fight. In general, the market likes less regulation.

In deal news, General Electric Co said it would buy British oilfield services company Wellstream Holdings Plc while Dell Inc agreed to buy data storage company Compellent Technologies Inc .

GE's stock shed 0.6 percent to $17.62 after reaching a deal to buy Wellstream by raising its bid for the British oil drilling pipe maker by 6 percent to $1.3 billion.

Dell fell 3.9 percent to $13.36 and was one of the biggest percentage losers in both the S&P and Nasdaq 100 <.NDX> after it sweetened its cash offer for Compellent to $27.75 a share. Compellent fell 2.5 percent to $27.98 after having traded above $34 last week.

Private equity firm Bain Capital agreed to buy IMCD, valuing the Dutch chemicals firm at around $857.5 million, while scientific instruments maker Thermo Fisher Scientific Inc is set to acquire Dionex Corp for $2.1 billion.

Thermo Fisher shares rose 4.8 percent to $55.56 and Dionex jumped 20 percent to $117.83.

U.S. President Barack Obama's tax deal with Republicans will likely win grudging passage in the U.S. Congress, backers and critics agreed, after Obama clashed with liberals in his own party who branded it a giveaway to the rich.

Declining stocks outnumbered advancing ones on the NYSE by a ratio of about 8 to 7, while on the Nasdaq, about eight stocks fell for every five that rose.

(Reporting by Ryan Vlastelica; Additional reporting by Caroline Valetkevitch; Editing by Jan Paschal)