NEW YORK – Wall Street pulled back Monday following Microsoft Corp.’s decision to withdraw its bid for Yahoo Inc. and as oil prices rose to a new record over $120 a barrel.

Microsoft had offered $47.5 billion to buy Yahoo Inc., but scrapped the bid late Saturday after the software maker and the Internet provider could not agree on a sale price. The failed deal came as a disappointment to Wall Street, as merger-and-acquisition activity tends to boost shareholder value, and also signals to the broader market that corporate America is optimistic about the future.

A jump in oil prices raised concerns that inflation could force consumers, who account for more than two-thirds of the economy, to cut their spending on discretionary items. Crude oil futures for June delivery surged to a new trading high of more than $120 a barrel on the New York Mercantile Exchange before pulling back to settle up $3.65 at a record $119.97. The jump followed worries over supply disruptions in areas such as Nigeria, Iran and Iraq.

“Energy is a very important piece,” said Russell Croft, portfolio manager at Croft Leominster Investment Management in Baltimore, referring to the mood of both investors and consumers. “It’s the price at the pump; it’s what people read about.”

Concerns about the impact of energy prices had slipped to the background on Wall Street in recent weeks, as investors focused more on earnings, the economy and on what the Federal Reserve might do about interest rates. When the Fed cut rates by a quarter point last Wednesday, it reminded Wall Street that inflation remains a priority along with the uncertain economy.

There is a growing sense on Wall Street that the Fed is in the process of putting its rate cuts on hold, and accelerating inflation would make such a pause more likely.

The Dow Jones industrial average fell 88.66, or 0.68 percent, to 12,969.54.

Germany’s DAX index rose 0.13 percent, and France’s CAC-40 fell 0.13 percent.