U.S. stocks lost ground on Monday, with each of the major indexes falling for a fourth straight session, as investors were hesitant to make new bets ahead of an expected shift in Federal Reserve policy that could lead to higher interest rates.
The declines marked the longest losing streak of the year for the Dow and S&P 500, while the Nasdaq matched its longest string of declines since mid-June.
The Nasdaq was positive for most of the session, spurred by gains in technology shares, such as Apple Inc (AAPL.O) and Google Inc (GOOG.O), before selling pressure in the last hour of trading turned the index negative. Apple shares gained 1.1 percent to $507.74 while Google advanced 1 percent to $865.65.
The Fed's policy of buying large amounts of bonds in an attempt to keep interest rates low has been a major force in the nearly 16 percent gain in the benchmark S&P 500 for the year. But many analysts expect that to change at the Fed's September policy meeting.
With a relatively light calendar this week for economic indicators, market participants are focused on the minutes from the July Fed meeting, due on Wednesday, for possible clues into policymakers' thinking.
"The market is just sitting on its hands right now until Wednesday with the Fed," said Terry Morris, senior equity manager for National Penn Investors Trust Company in Reading, Pennsylvania.
"The market has made a big run year-to-date and now investors have to consider the possibility of rising interest rates that could be for real, because the economy is growing for real, as opposed to all the stimulus and there is the possibility of the stimulus tapering."
Growing concerns about a pullback in the program contributed to the Dow's largest weekly drop in more than a year last week. In the bond market, the U.S. benchmark 10-year note yield touched a two-year high of 2.90 percent on Monday. <US/>
Market breadth deteriorated in the latter stages of trading. The cumulative net of trades on listed stocks was slanted by over 32,000 to the negative, the largest disparity since June 20, the day after Fed Chairman Ben Bernanke said the Fed could reduce its bond-buying plan.
The Dow Jones industrial average .DJI fell 71.11 points or 0.47 percent, to 15,010.36, the S&P 500 .SPX lost 9.77 points or 0.59 percent, to 1,646.06 and the Nasdaq Composite .IXIC dropped 13.692 points or 0.38 percent, to 3,589.086.
The S&P 500 closed below its 50-day moving average for a second consecutive session, a technical support level which could portend further declines.
Financial shares .SPSY dropped 1.3 percent. JPMorgan Chase & Co (JPM.N) fell 2.7 percent to $51.83 after a person familiar with the matter said the bank was the target of a federal bribery investigation into whether it hired the children of to Chinese officials to help win business.
Bank of America Corp (BAC.N) fell 1.9 percent to $14.15 while Citigroup Inc (C.N) lost 2 percent to $49.33.
Zillow (Z.O) shares slumped 7.1 percent to $84.74 after the company announced a stock offering and said it agreed to buy New York real estate website StreetEasy for $50 million.
Intel Corp (INTC.O) was a bright spot, up 1.7 percent to $22.28 as the biggest percentage gainer on the Dow. Piper Jaffray upgraded the Dow component and boosted its price target on the stock.
Trading volume was once again light as a result of uncertainty over the Fed and a lack of catalysts for investors. About 5.22 billion shares traded on the New York Stock Exchange, NYSE MKT and Nasdaq, below the daily average of 6.32 billion.
Declining stocks outnumbered advancing ones on the NYSE by 2,487 to 576, while on the Nasdaq, decliners beat advancers 1,774 to 759.