In Europe, shares of stricken German lender Deutsche Bank were higher in their first day of trading following a long weekend. The bank saw a roller-coaster ride last week on the news that it would have to pay $14 billion to settle with the U.S. Department of Justice. Talks on a settlement are still ongoing and speculation was rife over the weekend that the bank was aiming to lower the size of the penalty.
In Monday trading, the Dow fell 104.40 points at session lows before closing about 55 points lower, with Travelers Companies and UnitedHealth Group contributing the most losses. Meanwhile, the S&P 500 fell 0.3 percent, with real estate falling 1.8 percent to lead decliners.
On Tuesday, the U.S. Federal Reserve and its rate hiking schedule will be back in focus for investors. Friday's scheduled release on September employment is the key data point for the week.
Ahead of that, no major data are scheduled for Tuesday and traders will instead eye two U.S. Federal Reserve speakers for indications on the likelihood of a December interest rate hike.
Richmond Fed President Jeffrey Lacker said there was a strong case to raise interest rates significantly and keep inflation under control. "Pre-emptive increases in the federal funds rate are likely to play a critical role in maintaining the stability of inflation," Lacker, a non-voting member of the Fed's policymaking committee, said in a statement.
Chicago Fed President Charles Evans is set to speak at 7:40 p.m. ET, on monetary policy and the economy.
On the earnings front, Darden Restaurants and Aegion posted quarterly results.
—CNBC's Arjun Kharpal contributed to this report.