The day's selling wasn't surprising after major indicators shot up 1 percent last week, including a surge Friday in response to the government's stronger-than-expected jobs report.
With employment and housing numbers looking better, consumers are likely to be one of the market's main concerns during August. Big retailers such as Wal-Mart Stores Inc. and Macy's Inc. report earnings this week, and others will release results in the coming weeks. There appeared to be some nervousness ahead of those reports, as retailers were among the biggest losers Monday.
What stores have to say about their expectations could help stocks extend their summer rally or stifle it. "There's less emphasis on earnings and more emphasis on outlooks," said Bryan Place, principal at Place Financial Advisors.
Investors also will look to the Fed for indications of how the economy is faring. It is widely expected the Fed will keep key interest rates steady at near zero, but Wall Street will be paying more attention to the economic assessment the Fed issues with its rate decision rather than the decision itself.
The Dow Jones Industrial Average was lower by 32 points, or 0.3% to 9338. The S&P 500 was down 3.4 points, or 0.3%, to 1007. The Nasdaq Composite was lower by 8 points, or 0.4%, to 1992.
Profit-taking shouldn't be unexpected, but some market observers argue that selling has been without any conviction, which is a positive for bullish investors.
"While the market is in need of rest, we are noticing that every decline during the day is met with buying so that by day's end, the market is finishing with mild losses instead of the 100+ points of earlier trading," said Paul Nolte, director of investments at Hinsdale Associates, in an email.
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