U.S. stocks closed lower on Monday, amid falling oil prices, as investors digested a number of corporate results, key economic data and remarks from a key Federal Reserve official.
Fed Vice Chair Stanley Fischer warned of the dangers of low interest rates, suggesting they could lead to longer and deeper recessions, making the economy more vulnerable.
"We are very close to our targets" of full employment and 2 percent inflation, he said. "So we're not in deep trouble with monetary policy at the moment," he responded when asked about the concept of raising the Fed's inflation target.
Last week, Fed Chair Janet Yellen delivered a speech in which she said it's useful to consider the benefits of a "high-pressure economy," adding the post-financial crisis period has pushed policymakers into reconsidering the dynamics of inflation.
Investors have been heavily scrutinizing U.S. economic data, as well as remarks from key Fed officials, gauging the likelihood the central bank raises rates before year's end.
"For [the market] to break to the upside, we're going to need to see growth coming back into the world," said Arian Vojdani, investment strategist at MV Financial. "For us to break to the downside, we'll need to start losing faith in central bank policy."
"I think the market needs to get assurance from Corporate America. They want to know that things are getting better," said Quincy Krosby, market strategist at Prudential Financial. "This is still a market that's trying to figure out whether it wants to break higher or lower."
The S&P 500 slipped 0.3 percent, with consumer discretionary and energy leading decliners. The energy sector was pressured by falling oil prices. U.S. crude settled 0.81 percent lower at $49.94 per barrel, weighed by a rising rig count in the United States.
"A pullback unfolded last week, leading to a successful test of initial support near 2115 by the SPX. Short-term momentum has weakened, but oversold conditions are widespread enough to suggest that the pullback will mature this week," Katie Stockton, chief technical strategist at BTIG, said in a Monday note.
Jeremy Klein, chief market strategist at FBN Securities, attributed Monday's soft session for stocks, in part, to the three major indexes failing to hold most of their Friday gains. "People were very disappointed with how we finished Friday and that spilled over into today," he said.
On the earnings front, banking giant Bank of America was among the firms reporting quarterly earnings before the bell, beating expectations on both lines. That said, the SPDR S&P Bank ETF (KBE) fell 0.51 percent. Toymaker Hasbro also posted better-than-expected results, sending its stock more than 8 percent higher, before closing up 7.43 percent.
Earnings season has gotten off to a good start. Of the 34 S&P 500 companies that had reported as of Friday morning, 79 percent had beaten Wall Street estimates for earnings per share, according to Nick Raich of The Earnings Scout.
Investors also digested industrial production data, which showed a 0.1 percent increase in September, slightly below a consensus estimate of 0.2 percent. Meanwhile, the New York Fed's Empire State business conditions showed manufacturing in the state contracted for the third straight month.
A slew of economic data is scheduled for release later this week, including CPI, housing starts and the Beige Book.
"I think the most important report this week will be the CPI report. I think it will show inflation further rising here," said David Kelly, chief global strategist at JPMorgan Funds. He added the report would carry added weight after Chair Yellen's speech on Friday.
Overseas, Chinese GDP, retail sales and industrial profits are all scheduled for release on Wednesday. Last week, U.S. stocks were weighed down by a surprise fall in Chinese exports.
"It's pretty clear that China is bumping along the bottom. When we'll see a turnaround, that's unknown," said Maris Ogg, president at Tower Bridge Advisors. But "when you talk to companies that have boots on the ground, ... I think that's gives better color on the data." Ogg pointed specifically to Caterpillar, which is scheduled to report quarterly results next week.
Elsewhere, U.S. Treasury yields slipped but remained close to recent highs, with the two-year note yield around 0.82 percent and the 10-year yield near 1.77 percent.
The U.S. dollar fell slightly against a basket of currencies, with the euro steady around $1.10 and the yen just below 104.
The fell 6.48 points, or 0.3 percent, to close at 2,126.5, with consumer discretionary leading seven sectors lower and utilities leading risers.
The Nasdaq slipped 14.34 points, or 0.27 percent, to close at 5,199.82.
About three stocks declined for every two advancers at the New York Stock Exchange, with an exchange volume of 692.43 million and a composite volume of 2.765 billion at the close.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 16.5.
Gold futures for December delivery rose $1.10 to settle at $1,256.60 per ounce.
—CNBC's Jeff Cox and Reuters contributed to this report.
On tap this week:
Earnings: IBM, Netflix, United Continental, JB Hunt Transportation, Celanese
Earnings: Goldman Sachs, BlackRock, Johnson and Johnson, United Health, Philip Morris, Comerica, Domino's Pizza, Harley-Davidson, Kansas City Southern, Intel, Yahoo, Intuitive Surgical, Pinnacle Financial
8:30 a.m. CPI
10 a.m. NAHB survey
4 p.m. TIC data
Earnings: American Express, Morgan Stanley, US Bancorp, M&T Bank, eBay, Abbott Labs, Halliburton, St. Jude Medical, Tupperware, Supervalu, Unifirst, Tractor Supply, SLM, Citrix, Canadian Pacific Railroad, Northern Trust
8:30 a.m. Housing starts
8:45 a.m. San Francisco Fed President John Williams
1:30 p.m. Dallas Fed President Rob Kaplan
2 p.m. Beige book
7:45 p.m. New York Fed President William Dudley
Earnings: Microsoft, Verizon, Travelers, Union Pacific, Bank of NY Mellon, Walgreens Boots Alliance, Illinois Tool Works, E*Trade, Dunkin Brands, American Airlines, Alaska Airlines, Pulte Group, Fifth Third, KLA-Tencor, Advanced Micro
7:45 a.m. European Central Bank rate decision
8:30 a.m. New York Fed's Dudley welcoming remarks at NY Fed workshop on financial industry
8:30 a.m. Initial claims
8:30 a.m. Philadelphia Fed survey
10 a.m. Existing home sales
4:45 p.m. New York Fed's Dudley closing comments at workshop on financial services
10:15 a.m. Fed Gov. Daniel Tarullo
2:30 p.m. San Francisco Fed's Williams