The Dow Jones industrial average closed down 51.11, or 0.6 percent, at 8,531.57, having gained 3.3 percent last week to its highest level since January.
The broader market finished narrowly mixed. The NASDAQ composite index rose 1.16, or 0.1 percent, to 1,504.04, following a weekly advance of 4.8 percent to its best close in 10 months. The Standard & Poor's 500 index fell 3.53, or 0.4 percent, to 926.55, having risen 3.5 percent.
Boeing dropped $1 to $27.62 after The Wall Street Journal reported the Justice Department is investigating whether the defense contract improperly used a competitor's documents to win a military contract.
Stocks have surged in recent weeks on investor optimism following better-than-expected first-quarter earnings. But analysts caution that trading will likely be choppy in the near future unless there is more solid evidence of an economic recovery.
"It's a mixed bag on short-term economic news," said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee. "The market has been moving really well in the face of negative news. But there's a feeling that at some point it will need fundamentals to support it."
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A better-than-expected report on the U.S. services sector, meanwhile, temporarily lifted the Dow into positive territory early Monday but the blue chips soon lost momentum.
The Institute for Supply Management reported that its non-manufacturing index came in at 50.7 in April, up from 47.9 in March, according to Dow Jones Newswires. A reading above 50 indicates growth in the sector; analysts were expecting a reading of 49.0.
Analysts said investors also were avoiding major bets before Tuesday's Fed meeting. Fed policymakers are expected to leave interest rates unchanged, but investors are eager to see their accompanying comments on the state of the economy.
In addition, an earnings report from Cisco Systems set to be released after the close of markets Tuesday will provide an indication of whether the tech sector is set to boost capital spending in the second half of the year, Kolano said.