U.S. stocks were little changed on Monday as data measuring New York factory activity came in far below forecasts, offsetting optimism over a flurry of mergers.

The fear of a spreading euro-zone debt crisis has sparked dramatic volatility across global financial markets in recent weeks. The flurry of mergers and acquisitions Monday offered investors measured hope of continued strength in the U.S. recovery.

(M&A) usually gives the markets a lift on a Monday, and we had the big sell-off the last few days of last week, said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois. There is probably some optimism out there the worst may be over for that.

As long as the headlines aren't screaming about riots in Greece or disagreements over what is going on in the European monetary union, that allows people to return their focus here.

The Dow Jones industrial average <.DJI> dropped 17.69 points, or 0.17 percent, to 10,602.47. The Standard & Poor's 500 Index <.SPX> shed 0.63 points, or 0.06 percent, to 1,135.05. The Nasdaq Composite Index <.IXIC> gained 3.76 points, or 0.16 percent, to 2,350.61.

The New York Federal Reserve's gauge of manufacturing in New York State continued to grow in May, but at a slower pace and came in far below forecasts.

Hospital operator Universal Health Services Inc said it would buy Psychiatric Solutions Inc , an operator of mental health facilities, for about $2 billion in cash plus assumption of debt.

Psychiatric Solutions shed 0.8 percent to $32.38, while Universal Health jumped 8.5 percent to $42.36.

GLG Partners Inc surged 48.1 percent to $4.31 after it agreed to be acquired by rival hedge fund firm Man Group PLC .

(Reporting by Chuck Mikolajczak; editing by Jeffrey Benkoe)