Wall Street edged lower on Monday as renewed concerns about China's housing market and its economic growth pressured industrial and materials stocks.
Ongoing concerns about "automatic" budget cuts in the U.S. and the euro zone debt crisis also served as reasons for investors to take a breather from equities that have risen near record highs.
Stocks faced technical resistance as they climbed in recent weeks without a significant or prolonged pullback. The S&P and Dow are up more than 6 percent and 7 percent, respectively, for the year so far.
"After the gains that we have seen since the beginning of the year, it's normal to have flat periods like this. We are finally seeing money really coming back into equities for the first time since the financial crisis," said John Fox, co-manager at Fenimore Asset Management.
The Dow Jones industrial average <.DJI> was down 55.66 points, or 0.40 percent, at 14,034.00. The Standard & Poor's 500 Index <.SPX> was down 5.51 points, or 0.36 percent, at 1,512.69. The Nasdaq Composite Index <.IXIC> was down 13.99 points, or 0.44 percent, at 3,155.76.
The Dow is less than 1 percent away from hitting its life-time closing high, while the S&P is 3 percent below its record close.
Among S&P 500 sectors, the industrial sector <.SPLRCI> was down 1 percent and the materials sector <.SPLRCM> was off 0.6 percent, the day's biggest decliners.
Caterpillar Inc shares were off 2.2 percent at $89.39, weighing the most on the Dow index. Alcoa Inc shares were off 1.4 percent at $8.32.
Retail stocks were among the strongest after Deutsche Bank raised price targets on Target Corp and Macy's Inc . Target shares were up 1.9 percent at $65.37 and Macy's shares rose 1.7 percent at $41.38.
Plans to tighten curbs on the housing market in China and a slowdown in growth of that country's services sector prompted worries about growth in the world's second largest economy.
China's services industries expanded at the slowest pace in five months in February.
Also weighing on the market, Italy could be inching closer towards another election within months after center-left leader Pier Luigi Bersani issued an ultimatum to anti-establishment 5-Star Movement boss Beppe Grillo to support a new government or return to the polls.
The $85 billion in across-the-board U.S. spending cuts began taking effect over the weekend. Signs the cuts are beginning to take a toll on the economy could jostle markets.
Providing some support for the market, Janet Yellen, the Federal Reserve's influential vice chairwoman, said the central bank's aggressive monetary stimulus is warranted given how far below its full potential the economy is operating.
Hess Corp rose 3.8 percent to $69.04 after it said it will exit its retail, energy marketing, and energy trading businesses.
(Reporting By Angela Moon; Editing by Nick Zieminski)