Market focus this week will be on Federal Reserve Chairman Ben Bernanke as he gives his semi-annual report before the Senate Banking Committee on Tuesday and House Committee on Wednesday. Investors will listen for any hints of further stimulus measures.
"If the market doesn’t get the clear signal it wants tomorrow from Bernanke in reference to QE3, it will stamp its feet (like a toddler that doesn’t get his way) and we could see Friday’s gains evaporate," wrote Elliot Spar, senior vice president at Stifel Nicolaus, in his daily note.
Stocks opened lower after Chinese Premier Wen Jiabao said China's economy has not yet entered a recovery and "economic difficulties may continue for some time," but promised he would use further measures to help struggling sectors. His comments follow China's GDP report that showed economic growth fell to a three-year low in the second quarter.
Meanwhile, the IMF lowered its global growth forecastand warned that outlook could dim further if policymakers in Europe do not act to quell the region's debt crisis.
On the economic front, retail sales fell for the third-consecutive month, according to the Commerce Department. Meanwhile, business inventories gained in Mayto $1.58 trillion.
Also on the economic front, a gauge of manufacturing in New York state rebounded in July, according to the New York Fed's "Empire State" index.
Also among earnings, Gannett rose after the publisher of USA Today topped earnings expectations. But the company reported lower quarterly revenue amid the ad slump in the newspaper industry.
Alpha Natural Resources tumbled more than 10 percent after the BMO Capital Markets cut its rating on the coal producer to "underperform" from "outperform." The brokerage also lowered its rating on rival Arch Coal to "underperform" from "market perform."
Human Genome rallied after the biotech company agreed to be acquired by GlaxoSmithKline in a deal worth $3 billion, or $14.25 a share.
Also on the M&A front, Par Pharmaceutical skyrocketed after private-equity firm TPG said it would acquire the generic drug company for $1.9 billion, or $50 a share.
Comcast bought out Microsoft's 50 percent stake in MSNBC.com for a reported $300 millionto assume full control of the news website. Comcast is the parent company of NBCUniversal.
European shares closed loweras investors took profits on a 6-week run of gains. (Read More: Why Investors Cannot Ignore Greece)
—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter:
Coming Up This Week:
TUESDAY: CPI, treasury int'l capital, industrial production, housing market index, Ben Bernanke speaks, Cleveland Fed Pres speaks, Google Ideas conf.; Earnings from Coca-Cola, Goldman Sachs, J&J, Mattel, Intel, Yahoo, CSX
WEDNESDAY: Weekly mortgage apps, housing starts, Ben Bernanke speaks, Fed's Beige Book; Earnings from BofA, Abbott Labs, Honeywell, PNC Bank, USBancorp., AmEx, IBM (tentative), Qualcomm, Ebay, Yum Brands
THURSDAY: Jobless claims, existing home sales, Philadelphia Fed survey, leading indicators; Earnings from Morgan Stanley, Novartis, Philip Morris, Travelers, Verizon, AutoNation, BB&T, Blackstone, Nokia, Southwest Airlines, Google, Microsoft, AMD, Capital One, Chipotle, ETrade, Sandisk
FRIDAY: Fender and Kayak trading debut; Earnings from GE, Schlumberger, Xerox
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