U.S. stocks fell for a second session on Monday, with the Nasdaq especially hard hit as investors shed Facebook, Google and other high flyers.
"The Nasdaq seems to be getting hit disproportionately hard. I presume some of that is due to weakness in biotech," said Matthew Kaufler, portfolio manager at Federated Investors.
"These are all stocks that have had enormous gains over the last year; those are high-valuation stocks, and when you talk about a risk-off trade where people are withdrawing capital from riskier areas, that where people pull from first, stocks that have had significant run ups," Kaufler said.
"Tesla is a stock we would never look at because of its multiple. We're a value shop, we would pay for growth, but not that much," Kim Forrest, senior equity analyst at Fort Pitt Capital, said of the electric-car maker's valuation.
An article in the Wall Street Journal about advertisers not knowing if click throughs generate leads "could be pushing Google down," Forrest added. Shares of the search engine were off 1.7 percent.
The internet "can be a place that is ripe for fraud," so if a substantial portion of people on Facebook are fake, for instance, advertisers "would not be happy," Forrest added of the social-networking site, down 2.7 percent.
A final reading on U.S. manufacturing slipped in March, with the report from Markit Economics had factory activity slowing to 55 in March from a near four-month-high of 57.1 in February, with readings above 50 signaling expansion.
The Wall Street Journal reported Apple held discussions with cable-operator Comcast for a deal for a streaming-TV service. Herbalife rallied after it said it would nominate three people proposed by Carl Icahn to its board.
The Dow Jones Industrial Average gained as much as 77 points, and finished down 26.08 points, or 0.2 percent, at 16,276.69.
The shed 9.08 points, or 0.5 percent, to 1,857.44, with health care and consumer discretionary the poorest performing and telecommunications and utilities faring best among its 10 major industry groups.
The CBOE Volatility Index (VIX), a measure of investor uncertainty, rose 0.6 percent to 15.09.
Decliners outdid advancers by a roughly 8-to-5 ratio on the New York Stock Exchange, where 730 million shares traded. Composite volume neared 3.4 billion.
The dollar edged lower against the currencies of major U.S. trading partners.Treasury prices were mixed, with the two-year note's yield jumping 2 percent to 0.437 percent. The 10-year yield used to figure mortgage rates and other consumer loans fell 0.6 percent to 2.731 percent.
The bond market is responding to remarks by Federal Reserve Chair Janet Yellen last week, in which she signaled the possibility of sooner-than-expected hikes in interest rates, said Peter Boockvar, chief market analyst at the Lindsey Group.
"It's a continuation in the move that began with Yellen, and gets back to the problem where the bond market is going to decide for itself what policies should be," said Boockvar. Whether yields continue to climb "depends on data, if it's better, the two-year yields will go up, and force the Fed's hand," he added.
"I'm in the camp that says stocks love easy money, and QE3 is now going away. The stock market is making the wrong choice in thinking you can take away a trillion dollars of money printing without any impact," Boockvar. said.
Ahead of Wall Street's open, the flash Markit/HSBC Purchasing Managers' Index had Chinese manufacturing contracting in the first quarter of the year, boosting hopes that China's government might take steps to stimulate the economy.
Stocks on Friday posted weekly gains after economic reports including jobless claims and factory activity illustrated an expanding economy. Data on housing and durable goods are expected in days ahead.
(Read more: With Fed behind, traders eye US, global data)
—By CNBC's Kate Gibson
Coming Up This Week:
9:00 a.m.: FHFA home prices for January
9:00 a.m.: S&P Case-Shiller home prices for January
10 a.m.: New home sales for February
10 a.m.: Consumer confidence for March
10: a.m.: Richmond Fed manufacturing index
1 p.m.: Two-year note auction
4 p.m.: Fed's Lockhart speaks
7 p.m.: Fed's Plosser speaks
2 a.m.: Fed's Bullard speaks
7 a.m.: Mortgage applications
8:30 a.m.: Durable goods orders for February
9:45 a.m.: PMI services flash
10:30 a.m.: Oil inventories
1 p.m.: Five-year note auction
Earnings: Accenture, Lululemon Athletica, Signet Jewelers, Commercial Metals, GameStop, Leidos Holdings, Winnebago Industries, Worthington Industries, Red Hat, Oxford Industries, Restoration Hardware Holdings,Voxeljet
8:30 a.m.: GDP revision Q4
8:30 a.m.: Weekly jobless claims
8:30 a.m.: Fed's Pianalto speaks
10 a.m.: Pending home sales index for February
10:30 a.m.: Natural gas inventories
11 a.m.: Kansas City Fed manufacturing index
1 p.m.: Seven-year note auction
4 p.m. Fed balance sheet/money supply
9:30 p.m.: Fed's Evans speaks
8:30 a.m.: Personal income and consumer spending for February
9:55 a.m.: University of Michigan/Reuters consumer sentiment for March
1:15 p.m.: Fed's George speaks
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