U.S. stocks closed lower in light volume trade Monday, with energy stocks lagging as oil prices briefly hit their lowest in nearly three months.
Chevron fell nearly 2.5 percent, Exxon Mobil closed 1.9 percent lower and UnitedHealth lost almost 1.4 percent for the greatest negative impact on the Dow Jones industrial average. The index closed about 77 points lower after briefly falling more than 100 points. The Dow is up 3.1 percent for the month so far.
"I think everyone is really waiting for a big week — big week for earnings, big week for monetary policy," said Jeremy Klein, chief market strategist at FBN Securities.
"Crude is continuing to get sold and no one's talking about it," he said.
U.S. crude oil futures settled at $43.13, down $1.06, or 2.40 percent, weighed by concerns about oversupply. Earlier, WTI briefly fell below $43 a barrel to hit its lowest since late April. Energy closed nearly 2 percent lower as the greatest declining S&P 500 sector.
Genscape data pointed to an inventory rise of 1.1 million barrels at the Cushing, Oklahoma delivery base for U.S. crude futures in the week to July 22, Reuters said, citing traders who saw the numbers.
Luana Siegfried, energy research associate at Raymond James, attributed Monday's decline in oil prices to profit-taking, investor concerns about oversupply, and recent dollar strength. She expects oil to near $60 a barrel sometime in the third quarter.
Consumer discretionary was the only positive S&P sector, helped by gains in retail stocks. The SPDR S&P Retail ETF (XRT) closed 1 percent higher, with Outerwall gaining more than 11 percent and Nordstrom rising 4.6 percent.
Redbox owner Outerwall announced it would be bought for $1.6 billion by funds managed by Apollo Global Management.
"In general people are realizing (the retail stocks have) been beaten down a little too much," said Ilya Feygin, senior strategist at WallachBeth Capital. XRT is nearly 7.5 percent lower year-over-year.
The Nasdaq composite closed mildly lower, helped by gains in Gilead Sciences.
Apple had the greatest negative impact on the Nasdaq 100 as shares closed more than 1 percent lower for a third-straight day of declines. BGC downgraded the stock to "sell" from "hold" and also cut its price target based on expectations that fewer than forecast customers will upgrade to the next iPhone. The broker also cited Apple's challenges in launching non-smartphone products.
The iPhone maker is scheduled to report earnings Tuesday after the close. 3M, Caterpillar, DuPont, McDonald's, United Technologies and Verizon are due to post results ahead of the open.
Treasury yields were higher, with the 10-year yield near 1.57 percent. The was higher near 0.74 percent after the Treasury auctioned $26 billion in 2-year notes at a high yield of 0.760 percent. The bid-to-cover ratio, an indicator of demand, was 2.52, well below a recent average of 2.96.
The U.S. Federal Reserve is scheduled to conclude its two-day meeting Wednesday afternoon. While the central bank is not generally expected to raise rates, indications in the statement on the timing of the next hike will be key.
The Bank of Japan decision on monetary policy is expected overnight Thursday (Eastern Time). Traders will be watching for further accommodation and the reaction of the dollar-yen.
"The trend is really going to be, sit tight early this week," said Jack Ablin, chief investment officer at BMO Private Bank.
The U.S. dollar index was mildly lower after on Friday posting its first five-week win streak since January. The euro was near $1.099 and the yen near 105.8 yen versus the greenback. Pound sterling was near $1.31.
U.S. stocks closed higher Friday for their fourth-straight week of gains. The S&P 500 set a fresh record close of 2,175.03, while the Nasdaq composite ended at its highest of the year so far at 5,100.16. Friday marked one of the lightest trade volume days of the year so far.
"We have seen the (economic) data outperform," said John Caruso, senior market strategist at RJO Futures. However, he noted concern about low trade volume.
Cash levels are at the highest levels since November 2001, according to the latest Bank of America Merrill Lynch Fund Manager Survey released last week.
No major economic data was due Monday. The Dallas Fed manufacturing index improved from June's negative 18.3 to minus 1.3 in July. Second-quarter GDP and housing data are among the major reports due later in the week.
Major European indexes were mixed, with the STOXX Europe 600 Banks index about half a percent lower.
Asian stocks closed mostly higher, with the Shanghai composite and Hang Seng mildly higher but the Nikkei 225 a touch lower.
The closed 6.55 points lower, or 0.30 percent, at 2,168.48, with energy leading nine sectors lower and consumer discretionary the only advancer.
The Nasdaq composite closed 2.53 points lower, or 0.05 percent, at 5,097.63.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded higher near 13.
About three stocks declined for every two advancers on the New York Stock Exchange, with an exchange volume of 763 million and a composite volume of about 3.0 billion in the close.
Gold futures for August delivery settled down $3.90 at $1,319.50 an ounce.
On tap this week:
Earnings: Apple, Caterpillar, Verizon, 3M, DuPont, United Technologies, McDonald's, Eli Lilly, BP, Twitter, KeyCorp, KKR, Freeport-McMoRan, Martin Marietta Materials, Paccar, United Health Services, Starwood Hotels, T. Rowe Price, LVMH, Valero Energy, Under Armour, JetBlue, Anadarko Petroleum, Chubb, Panera Bread, U.S. Steel
Two-day Fed meeting begins
9 a.m. S&P/Case-Shiller home prices
9:45 a.m. Services PMI
10 a.m. New home sales
10 a.m. Consumer confidence
1 p.m. $34 billion 5-year note auction
Earnings: Boeing, Coca-Cola, Comcast, Facebook, Amgen, State Street, Whole Foods, Groupon, GoPro, Cheesecake Factory, GlaxoSmithKline, Lumber Liquidators, Six Flags, Altria, Deutsche Bank, Fiat Chrysler, Statoil, Dr. Pepper Snapple, Ingersoll Rand, Hess, Corning, Nissan, Norfolk Southern, Nintendo, Southern Co, Anthem, Statoil, General Dynamics, Nasdaq OMX, Northrop Grumman, Mondelez
7 a.m. Mortgage applications
8:30 a.m. Durable goods; pending homes
11:30 a.m. $15 billion 2-year floating rate notes auction
2 p.m. FOMC rate decision
Earnings: Amazon.com, Alphabet, AstraZeneca, Bristol-Myers Squibb, Colgate-Palmolive, Celgene, Cigna, Total, MasterCard, Ford, Dow Chemical, Diageo, ConocoPhillips, Credit Suisse, Royal Dutch Shell, BNP Paribas, Hershey, HCA, Harley-Davidson, Marsh & McLennan, Marathon Petroleum, Potash, PG&E, TransCanda, Raytheon, Expedia, CBS, Samsung
8:30 a.m. Jobless claims; advance trade balance
1 p.m. $28 billion 7-year auction
Earnings: Exxon Mobil, Chevron, Merck, AB InBev, UPS, UBS, Sanofi, Xerox, CBOE Holdings, Philips 66, Cabot Oil, Barclays, Eni, Tenneco, Lexmark, CNA Financial
8:30 a.m. Q2 GDP
9:30 a.m. San Francisco Fed President John Williams
9:45 a.m. Chicago PMI
10 a.m. University of Michigan consumer sentiment
1 p.m. Dallas Fed President Rob Kaplan
*Planner subject to change.