U.S. stocks closed down on Monday despite encouraging economic data as the Hong Kong protests weighed on global markets.
"It seems we're willing to ignore what is going on domestically and pay attention to the global macro newsflow," Art Hogan, chief market strategist at Wunderlich Securities, said.
Read MoreWhy Hong Kong unrest scares markets
The Dow and S&P regained ground after falling about 1 percent in the open. In late-morning trade, the Nasdaq also reversed losses to turn positive briefly before trading in the red again.
"Actually I think it's pretty impressive that the market has come back," JJ Kinahan, chief derivatives strategist for TD Ameritrade, said. "One thing to focus on is, although the S&Ps have rallied pretty [well], the bonds have not."
The benchmark 10-year Treasury note yield gained one basis point to 2.49 percent.
Stocks did not move much in reaction to a 1 percent decline in pending home sales for August, and futures were little changed after reports that personal income rose 0.3 percent in August, as expected.
"I expect investors to concentrate on the economic data before we move into earnings season," Peter Cardillo, chief market economist at Rockwell Global Capital, said.
Scheduled tomorrow are purchasing managers' index and consumer confidence, ahead of Friday's important jobs number.
We "need a strong PMI and easing of tension in Hong Kong to turn things around," Jack Ablin, chief investment officer at Harris Private Bank, said.
Earlier, protests in Hong Kong had rattled global markets and U.S. stocks about percent lower, but most analysts said the situation would not have a long-lasting impact on markets.
"I think this is a continuation of a market that is realizing how much the Fed's QE has propelled it" rather than fundamentals, Quincy Krosby, market strategist with Prudential Financial, said. The market is "getting ready to find the equilibrium between the fundamentals and the Fed."
Kim Forrest, senior equity analyst at Fort Pitt Capital in Pittsburgh, also did not think that the Hong Kong protests were the sole driver behind the market.
"I do think we're going to be heading to that volatile time," she said. The Fed is "clear on what it thinks it's going to do. Investors may not agree."
The German DAX fell more than 1 percent on Monday, well below its 50-day moving average.
U.S. stocks rose sharply on Friday, cutting losses for the week, after the government raised its estimate of economic growth in the second quarter and consumer sentiment rose in September.
The rally boosted Europe and other stock markets, but sentiment was hit and the Hang Seng closed 1.9 percent lower on Monday after pro-democracy protest in Hong Kong intensified over the weekend. Riot police fired rounds of tear gas and demonstrators continued to block roads on Monday, leading schools and banks to close.
But unless the situation continues to deteriorate significantly, analysts believed investors would resume a focus on domestic events.
"What will ultimately give us stability will be the earnings season, which I'm actually quite optimistic on," Dan Veru, chief investment officer for Palisade Capital Management,said. "I think the fourth quarter could be decent."
"There's still a moderate improvement in macroeconomic improvement in the U.S.," Nick Raich, CEO of The Earnings Scout, said. "It's just going to create another buying opportunity."
The ended 5.05 points lower, or 0.25 percent, at 1,977.80, with energy the greatest decliner and utilities the only advancer among 10 sectors.
The Nasdaq closed down 6.34 points, or 0.14 percent, at 4,505.85.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 16, up 7 percent.
Three stocks declined for every two advancers on the New York Stock Exchange, with an exchange volume of 644 million and a composite volume of 3 billion in the close.
The U.S. dollar ended the day slightly higher against major world currencies.
Crude oil futures reversed an earlier decline to settle up $1.03 at $94.57 a barrel on the New York Mercantile Exchange, while gold futures settled $3.40 higher at $1,218.80 an ounce.
In corporate news, Alibaba fell as options of the Chinese tech conglomerate traded for the first time, with 21,000 calls and 19,000 puts in the initial hour of trade.
GoPro touched record highs on Monday, nearly tripling in value from its initial public offering in June.
Baidu rose after UBS upgraded its rating on the Chinese search engine to "buy."
Bank of America edged lower on news that the bank had to the Securities and Exchange Commission for securities law violations that resulted in an overestimate that eventually reached billions of dollars.
On tap this week:
9:00 a.m.: S&P/Case-Shiller home prices
9:45 a.m.: Chicago PMI
10:00 a.m.: Consumer confidence
Earnings: Accuity Brands
Monthly vehicle sales
8:15 a.m.: ADP employment
10:00 a.m.: ISM manufacturing
10:00 a.m.: Construction spending
8:30 a.m.: Initial claims
10:00 a.m.: Factory orders
8:30 a.m.: Employment report
8:30 a.m.: International trade
10:00 a.m.: ISM nonmanufacturing
—By CNBC's Evelyn Cheng
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