NEW YORK (Reuters) - Stocks fell on Monday, pulling back before this week's Federal Reserve meeting that could signal when the Fed is going to begin reducing its bond purchases aimed at helping the economic recovery.
Losses were led by the energy and financial sectors, with both the S&P energy index <.SPNY> and S&P financial index <.SPSY> down 0.8 percent. Shares of Southwestern Energy
Several merger announcements helped to limit losses, along with news of a $1 billion stock repurchase program by Caterpillar
But the Fed's statement, which is due on Wednesday after a two-day meeting of the Fed's Open Market Committee, kept investors wary of buying. The statement will be scrutinized for hints on when the central bank may begin to scale back its massive bond-buying aimed at stimulating the economy.
Data this week includes July's payrolls report, another key event for the market.
"A lot depends on how (Fed policymakers) interpret the data and how they comment ahead of the employment report. We're looking for clues as to whether tapering is going to begin in September or not," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.
The Dow Jones industrial average <.DJI> was down 36.86 points, or 0.24 percent, at 15,521.97. The Standard & Poor's 500 Index <.SPX> was down 6.32 points, or 0.37 percent, at 1,685.33. The Nasdaq Composite Index <.IXIC> was down 14.02 points, or 0.39 percent, at 3,599.14.
September is the most likely time for the Fed to begin paring its $85 billion in monthly bond purchases, according to a July 22 Reuters poll of economists.
Some investors have worried that big gains in jobs numbers could be enough of an economic pickup to prompt an early end to the Fed's bond buying, a program which has helped stocks rally for much of this year.
But analysts have noted that signs of a stronger economy are more important for the market in the long run. The S&P 500 is up 18.2 percent for the year so far.
Monday's data was less than upbeat. Contracts to purchase previously owned U.S. homes fell in June, retreating from a more than six-year high touched in May as rising mortgage rates were starting to dampen home sales.
Merger activity could give equities support as big deals show that large investors see value in the market.
"It's interesting to me that you've got deal activity this time of the year because normally this is the time of the year when the markets are quite quiet," said Dan Veru, chief investment officer of Palisade Capital Management in Fort Lee, New Jersey, which manages about $4.5 billion in assets.
"To have mergers going on now probably bodes well that the fall is going to be a very active period."
U.S. drugmaker Perrigo
Hudson's Bay Co
Shares in advertising groups jumped after Publicis
Omnicom shares were down 0.6 percent to $64.75 while smaller rival Interpublic Group
Among the day's big gainers, shares of CF Industries Holdings Inc
In earnings news, Loews Corp
Halfway through earnings season, 67.2 percent of S&P 500 companies have beaten analysts' expectations - in line with the 67 percent average beat over the last four quarters. About 56 percent of the companies have beaten revenue expectations, more than the 48 percent of revenue beats in the past four earnings seasons but below the historical average.
(Additional reporting by Alison Griswold and Rodrigo Campos; Editing by Kenneth Barry)
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