Stocks closed lower amid muted reaction to the Federal Reserve's decision to leave interest rates unchanged.
The Dow Jones Industrials rallied from earlier lows, but closed down for the day.
The Nasdaq and S&P 500 closed slightly down.
On the New York Stock Exchange, decliners led advancers 1,851 to 1,449 with 148 stocks unchanged. The pattern was similar on Nasdaq, where decliners led advancers 1,860 to 1,120 with 178 stocks unchanged.
November's retail sales will be released on Wednesday. Analysts expect a 0.2% increase following a 0.4% decline in October.
Also Wednesday, the Energy Information Agency is expected to report a 600,000-barrel decline in crude oil in storage in the U.S., following a drop of 1.1 million barrels the week before.
The Mortgage Bankers Association will release its weekly survey of mortage and refinancing applications Wednesday. Last week, mortage applications increased 4.9% and refinancing was up 13.7%.
As expected, the nation's central bank kept its benchmark interest rate at 5.25%.
The Federal Open Market Committee said, "Economic growth has slowed over the course of the year, partly reflecting a substantial cooling of the housing market. Although recent indicators have been mixed, the economy seems likely to expand at a moderate pace on balance over coming quarters."
The committee left open the possibility of future increases, if needed, and said it will keep an eye on economic data.
"The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information," the committee said.
James Bianco, president of Bianco Research, told CNBC he expects the Fed to stand pat.
"We're on hold for as far as we can see for the time being," he said.
Caterpillar dragged down the blue chips after competitor AGCO Corp. forecast a rise in sales of only 3-5% in 2007.
Shares of Best Buy are under pressure after the consumer electronics giant reported third-quarter earnings below Wall Street estimates. The company said it earned 31 cents a share in the third quarter, short of the 35 cents a share consensus estimate from analysts surveyed by First Call. Best Buy, however, said it remains on track to deliver annual earnings of $2.65 to $2.80 a share.
Texas Instruments cut its fourth-quarter sales and earnings forecast. The world's top maker of cell phone microchips said demand in its wireless business was weaker than expected. However, shares rose after JP Morgan upgraded the stock to overweight from neutral, saying the company's gross margins may be bottoming out.
Merck said in a statement ahead of the company's annual analyst meeting that it expects to file three new drug applications with the Food and Drug Administration in 2007. The drugs would be used to treat HIV, cholesterol and insomnia.
Goldman Sachs reported fourth-quarter that revenue rose 93% compared with the same period a year ago. The investment banking giant said fourth-quarter revenue totaled $9.41 billion, higher than consensus estimates from Wall Street analysts. Goldman Sachs credited the strong quarter to investment gains and robust M&A and leveraged buyout activity. Analysts, however, voiced concerns about the company repeating such a stellar quarter in 2007.
Shares of Dow component Citigroup are down after the company announced changes to its top-level management. Robert Druskin, the current president and chief executive of Citigroup corporate and investment-banking, has been named chief operating officer, reporting directly to CEO Charles Prince. Some investors already are saying that the banking giant may need to do more to boost its stock price.
The government said the U.S. trade deficit fell sharply in October. to its lowest level in 14 months due to a decline in crude oil prices. The trade deficit fell to $58.87 billion, far lower than ecomomists expected. However, the U.S. deficit with China hit an all-time high.
Europe Closes Mostly Flat
London's FTSE-100 , the CAC-40 in Paris and the Frankfurt DAX closed flat to slightly higher.