Stocks ended mixed as the major markets bounced off the day's lows following disappointing monthly housing data.
"We may see some weakness but overall we like the market, I think the direction is going to be higher," said Sebastian Leburn, chief investment officer at Weiss Capital Management, in an interview with CNBC.com.
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"When the volatility picks up in the market you have to be more selective and stock picking becomes more important," Leburn added. "The equity bull market is going into its fifth year, so this is not a young bull market."
Five of 10 sectors in the S&P 500 closed higher as energy stocks and basic materials shares gained while industrials and financial stocks led downside movers. Breadth was slightly worse than neutral as declining shares edged advancers on the New York Stock Exchange.
"At the end of the day really no damage has been done except a bit of an unwinding of the extreme bullishness of the last couple of weeks and the trend is higher," Jordan Kotick, global head of technical analysis at Barclays Capital, told CNBC. "This is a global equity bull market and in that environment you want to stay focused to the upside."
Tech stocks reversed earlier declines as company-specific news boosted stocks and Wall Street sentiment turned positive on two sector bellwethers.
Dell rose after Goldman Sachs upgraded the stock to "buy" from "neutral," citing "numerous catalysts" in the next 12 to 18 months. "Although we know we are early and that there will be inevitable backsteps, the history of turnarounds suggests that a good part of the stock rise comes in the first 12 months," wrote analyst Laura Conigliaro.
Goldman Sachs also raised earnings estimates for eBay , boosting shares of the online auction giant. EBay will report quarterly earnings in mid-April.
Microsoft rose after the world's largest software company said it sold more than 20 million Windows Vista licenses, doubling the pace of its predecessor, Windows XP.
Online music provider Napster spiked in afternoon trading on news the company will collaborate with telecom giant AT&T, but shares gave back some gains by the close.
Boston Scientific shares traded sharply lower on disappointing new trial data which showed that patients with a stent did not see a lower rate of heart attacks compared with those without one.
Merck and Schering-Plough said they were beginning development on a cholesterol-lowering product that would combine their Zetia drug with Lipitor, the blockbuster drug sold by Pfizer .
Shares of Biosite surged more than 50% after the medical diagnostics company agreed to be acquired by Beckman Coulter in a $1.55 billion cash deal, or $85 a share.
This morning, the Commerce Department said February new home sales declined 3.9%, a reflection of continued weakness in the U.S. housing market. Monthly inventories rose 1.5%, the highest level since January 1991.
"It was shockingly bad, frankly," Mike Larson, real estate analyst with Weiss Research, told CNBC.com. "We had such a sharp decline in January you would've expected a bounceback."
"On a technical and fundamental basis, things look very shaky to me and I wouldn't recommend our investors buy at this point," Larson said. "Housing stocks are in for a rough haul here, the numbers suggest another leg down for housing demand."
Homebuilders such as KB Home, Lennar and Pulte Homes all saw shares decline on the news.
Light crude futures closed just below $63 a barrel amid rising political tensions regarding Iran's nuclear program and the recent capture of 15 British sailors.
Treasury prices gained on the weak housing numbers, sending yields lower.
Europe Closes Lower, Asia Sees Strong Gains
European shares closed trading on Monday with solid declines, reflecting the weak U.S. housing data.
The DAX ended down 1% as Germany's Porsche AG announced plans to increase its stake in VW to just under 31%, which triggered a mandatory takeover bid.
The FTSE 100 closed down 0.76% while the CAC-40 declined more than 1%. In Britain, Taylor Woodrow and George Wimpey will merge and create Britain’s largest homebuilder in a deal worth just under $10 billion.
Tokyo's Nikkei 225 Average finished at a one-month high after gains in exporters including Fanuc were partly offset by losses in property shares such as Sumitomo Realty & Development.
In South Korea, the Kospi Index ended at their highest close in a month as chipmakers gained on hopes for rebounding flash memory chip prices, while Hyundai Heavy hit a record after winning a $1.1 billion deal to build a power plant.
Hong Kong stocks closed higher as China Mobile rebounded and Sinopec logged further gains as investors bet on improving refining margins.