The Dow Jones Industrial Average fell as much as 118 points before settling 78 points, or 0.7% lower at 10,751. The S&P 500 shed 9 points, or 0.8%, to 1,137, and the Nasdaq suffered the steepest knock, declining by 26 points, or 1.1%, to 2,344.
Stocks fell across the board, but materials and tech stocks led the declines.
Investors were greeted Monday morning with the kind of mixed economic reports that have come to be expected in a stalling economic recovery.
Factory orders slipped 0.5% in August after rising 0.5% in July, the Department of Commerce said. The decline was in line with expectations.
Keith Hembre, chief economist and chief investment strategist at First American Funds, said pending-home sales figures tend to jump around from month to month but general housing market indicators continue to point to a market that isn't deteriorating, but also isn't showing much improvement.
Hembre believes investors may be awaiting ISM non-manufacturing numbers for September on Tuesday in addition to Friday's highly anticipated September nonfarm payrolls report from the Labor Department.
Also on tap for the week is the start of third-quarter earnings season.
"Earnings performance has been much stronger than the economy in general, and I would expect that would continue -- although, I think the magnitude of that discrepancy will begin to close. You have seen some softer indicators going into this earnings season in terms of pre-announcements -- they haven't been as robust as they have been in the past few quarters," he said. "Overall, I don't think there'll be a lot of disappointments in the third quarter, but I think the guidance for the fourth quarter and into 2011 will be very important."
Elsewhere in commodity markets, the December gold contract shed $1 to settle at $1,316.80 an ounce.
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