Stocks finished off their worst levels Monday but still ended in the red as renewed concerns over Greece and slowing growth in China overshadowed better-than-expected economic news in the U.S.
The Dow Jones Industrial Average slipped 14.76 points, or 0.11 percent, to close at 12,962.81, led by Alcoa and Caterpillar . Merck closed higher.
The S&P 500 erased 5.30 points, or 0.39 percent, to finish at 1,364.33. The Nasdaq slumped 25.71 points, or 0.86 percent, to end at 2,950.48, logging its biggest drop this year.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, closed above 18.
Among the key 10 S&P sectors, materials and techs ended lower, while consumer staples gained.
“We should be prepared for some churn in the short-run later this month and in the second quarter,” said Mark Martiak, senior wealth strategist at Premier Financial Advisors.
But despite the market hesitation, Martiak said any pullback represents a buying opportunity as economic news remains “very supportive.”
On the heels of a pullback, Martiak recommended investors to pile up their portfolios with techs, banks, energy and the emerging markets.
European stocks closed loweramid continued concerns about the Greek debt swap deal. This comes after Moody's last week downgraded the debt-ridden nation to "C,"the lowest rating on its bond scale, from "Ca," citing default risk concerns.
In addition, the euro zone's private sector declined again in February, deflating hopes the region would avoid another recession.
And China slashed its 2012 growth targetto an 8-year low of 7.5 percent. Chinese Premier Wen Jiabao said he hopes to reach the target by following proactive fiscal and prudent monetary policies to combat downward pressure on growth and still high inflation.
Material stocks such as Rio Tinto , ArcelorMittal and CF Industries all slumped amid concerns over slower growth. Adding to woes, Citigroup downgraded CF Industries to "neutral" from "buy."
“The market’s swimming in quicksand—it’s a slow death because we’ve run up so fast,” said Todd Schoenberger, managing director at LandColt Trading. “The big news today was China and the next news that people are watching for is the jobs number on Friday.”
The government's non-farm payroll data is expected to show an increase of 210,000 jobs last month, according to a Reuters poll, but whisper numbers among traders have been elevated to 250-300,000. Schoenberger warned that if the jobs number does not impress to the upside, then the market should see a pullback.
On the tech front, Apple said the number of downloads from its App Store has now reached 25 billion. Separately, Apple stock saw a brief mid-morning correction, dropping almost 3 percent within 7 minutes, but the shares have been recovering the losses since.
Meanwhile, Yahoo may be preparing for a "massive restructuring," resulting in layoffs by the thousands, according to a report from AllThingsD.
Zynga plunged after JPMorgan cut its rating on the social network game developer to "neutral" from "overweight."
Yelp tumbled on its second day of trading, after surging more than 60 percent last Friday at its market debut.
Among banks, Citigroup's Richard Parsons is stepping down after 16 years on the board and three as chairman. Michael O’Neill is expected to take over Parsons' post as chairman.
Wells Fargo is reportedly planning to expand into 20 overseas markets in an effort to expand its overseas operations, according to the Financial Times.
Meanwhile, a group of JPMorgan's top proprietary traders will be launching what will be one of the biggest hedge fund start-ups of 2012, amid regulatory changes within the bank.
On the economic front, the rate of expansion in the services sector posted a surprising gainin February to 57.3 in February, posting its best level since last year, according to the Institute for Supply Management's services index. The reading exceeded economists' expectations for 56.1, according to a Reuters poll. A reading above 50 signals growth in the sector.
Meanwhile, factory orders fell 1 percent in January, logging its biggest drop in over a year, according to the Commerce Department. Economists polled by Reuters had expected a decline of 1.5 percent.
Dick's Sporting Goods and Pandora are scheduled to post earnings on Tuesday.
—Follow JeeYeon Park on Twitter: @JeeYeonParkCNBC—
On Tap This Week:
TUESDAY: Earnings from Dicks Sporting Goods, Pandora
WEDNESDAY: Weekly mortgage apps, Challenger job-cut report, ADP employment report, productivity & costs, oil inventories, consumer credit; Earnings from American Eagle, Hovnanian, H&R Block
THURSDAY: Jobless claims, quarterly services survey; Earnings from Smithfield Foods, Aeropostale
FRIDAY: Non-farm payrolls, international trade, wholesale trade; Earnings from Ann
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