Stocks kicked off the week on a weak note as investors hesitated to jump in ahead of the Federal Reserve meeting and a series of key economic reports.
(Read more: 'Rally has gone too far,' Citi strategist says)
Still, the S&P 500 remains on pace for its best monthly gain since October 2011.
Among key S&P Sectors, energy and financials led the laggards,while telecoms gained.
On the economic front, pending home sales dipped 0.4 percent in June, according to the National Association of Realtors, pulling back from a six-year high in the previous month.
About one-fifth of the S&P 500 companies report earnings in the coming week. About half of the S&P 500 has reported earnings so far, with 68 percent beating earnings estimates, and 56 percent topping revenue forecasts, according to data from Thomson Reuters.
However, market attention will mostly be on the Federal Reserve's two-day meeting, which starts on Tuesday and may give an indication of when the central bank's massive asset purchase program will be tailed back. The Bank of England and the European Central Bank will also meet this week.
"All of them are expected to touch on the subject of forward guidance, albeit to various extents," Credit Agricole analysts wrote in a research note. "The clarity of the symphony will determine the level of support to the risk appetite. Should any of them be more explicit (more dovish) about forward guidance, the market can be expected to react in a positive way."
The gross domestic product for the second quarter will be reported on Wednesday and the key payrolls report on Friday.
Meanwhile, Asian equity markets declined across the board as renewed fears of an economic slowdown in China hindered gains. Japanese stocks fell to a new four-week low on the back of the strengthening yen. The dollar-yen hit a new one-month low of 97.61 leading to a sell-off across the export-heavy Nikkei index.