The Russell 2000, a strong performer for the last few days, closed mildly lower, near all-time highs.
"As we get closer to the last few days of trading (for the first quarter) we're going to see more volatility," said Peter Cardillo, chief market economist at Rockwell Global Capital. "I think the market turns technical this week."
He expects the S&P 500 could reach 2,125 and the Nasdaq touch 5,075, which "will invite some selling" and lead to a technical correction in April.
European equities closed lower on Monday, with Greece in the spotlight as German Chancellor Angela Merkel and Greek Prime Minister Alexis Tsipras met in Berlin.
Existing home sales in February were up 1.2 percent, to an annual rate of 4.88 million units, slightly below expectations. No other economic data was due on Monday.
"I think the biggest thing is still if investors can get enough strength (from economic data) to get us through what's probably going to be a weak earnings season. Investors were encouraged by the news last week that the Fed would continue relaxing monetary policy," said Bruce McCain, chief investment strategist at Key Private Bank. But "at some point we need to see some stronger fundamentals."
In the next few days, inflation data, durable goods and the third read on fourth-quarter GDP round out a relatively light week of reports, with few companies reporting earnings.
"Now that investors have realized the Fed is going to move on data dependent, each piece of macroeconomic news that comes out on the weak side puts the timeframe of monetary policy change further away," said Cardillo said.
Vice Chair of the Fed Board of Governors Stanley Fischer said on Monday that a Fed Fund rate increase is likely this year.
A hike will be appropriate when the Fed sees "further improvement in the labor market" and is "reasonably confident" that inflation is moving back to 2 percent, he said before the Economic Club of New York.
Read MoreThis is what could drive stocks this week
Dovish comments from the Federal Reserve helped weaken the dollar last week, as expectations of a rate rise were pushed back.
St. Louis Federal Reserve President James Bullard said the strength in the U.S. dollar over recent months had mainly been due to the aggressive policies of the European Central Bank (ECB), rather than the Fed's potential move on rates.
Read MoreFed's Bullard: Markets could have another 'tantrum'
"(The dollar strength) really is the ECB," he told CNBC Monday. "They've resisted this for years."
Bullard also warned that global markets were facing a "mismatch" with the future of U.S. monetary policy and had the potential for major volatility.
"Last week was pretty volatile from the perspective of big swings in the market, not the VIX," said Randy Frederick, managing director of trading and derivatives at Charles Schwab. "I continue to see this as an indication the institutional players don't see much concern to the downside."
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 13.
U.S. stocks surged 1 percent on Friday, with the Dow and S&P breaking a three-week losing streak and the Nasdaq posting its second close above 5,000 since March 2009. Friday marked the eighth consecutive trading session in which the Dow and S&P 500 alternated between daily gains and losses, with the Dow moving triple-digits each day.
In corporate news:
Biogen—Stifel downgraded the stock to "hold," stating that the pharmaceutical company has reached a reasonable price target for the next 12 months.
Staples—UBS upgraded the stock to "buy," noting a favorable risk and reward proposition. The investment bank thinks the office supplies retailer will "more likely than not" be able to close its acquisition of Office Depot.
Pfizer—Jefferies added the pharmaceutical company to its "Franchise Picks" list, noting it expects the firm to show significant appreciation over the next one to two years based on better-than-expected launch of breast cancer drug Ibrance. The investment bank also saw potential for more merger and acquisition activity.
Cliffs Natural Resources announced it will sell Chromite assets in Canada to a local mining company, Noront Resources, for $20 million.
Read MoreEarly movers: Biogen, Staples, Pfizer & more
Tenet Healthcare and United Surgical Partners International (USPI) will combine to create the largest provider of ambulatory surgery in the United States in a cash and debt transaction valued at $1.93 billion.
The Dow Jones Industrial Average closed down 11.61 points, or 0.06 percent, at 18,116.04, with Pfizer leading gains and Home Depot the greatest laggard.
The S&P 500 closed down 3.68 points, or 0.17 percent, at 2,104.42, with consumer staples leading four sectors higher and industrials the greatest laggard.
The Nasdaq closed down 15.44 points, or 0.31 percent, at 5,010.97.
Advancers were a step ahead of decliners on the New York Stock Exchange, with an exchange volume of 727 million and a composite volume of 3.2 billion in the close.
High-frequency trading accounted for 47.5 percent of March's daily trading volume of about 6.6 billion shares, according to TABB Group. During the peak levels of high-frequency trading in 2009, about 61 percent of 9.8 billion of average daily shares traded were executed by high-frequency traders.
Gold futures closed up $3.10 at $1,187.70 an ounce.