Stocks fell on Monday after Greece's efforts to reach a debt restructuring with creditors stalled, hampering European leaders' push to shift the market's focus to jobs and growth.
Negotiations between the Greek government and private bondholders over the restructuring of 200 billion euros of debt made progress over the weekend, but a final agreement could not be reached before the start of a summit of European leaders.
Until this deal is actually done, there are going to be concerns. The longer it takes there is more suspicion that there is something wrong, said Michael Yoshikami, chief investment strategist at YCMNet Advisors in Walnut Creek, California.
They've been saying they're on the verge of a deal for a long time.
The European summit initially was to focus on ways to revive growth and create jobs in a climate of fiscal austerity.
Germany sought to tone down reports it was pushing for Greece to give up control over its budget policy to European institutions. Greece was unlikely to accept that scenario, presenting yet another obstacle to a second bailout package for Athens.
The financial sector <.GSPF>, down 1.5 percent, was the biggest drag on the S&P 500. Bank of America
The Dow Jones industrial average <.DJI> dropped 67.62 points, or 0.53 percent, to 12,592.84. The S&P 500 index <.INX> lost 7.86 points, or 0.60 percent, to 1,308.47. The Nasdaq Composite <.IXIC> fell 8.94 points, or 0.32 percent, to 2,807.61.
The major indexes were earlier down more than 1 percent.
Despite Monday's decline, some traders stressed the resilience of U.S. stocks. Even though the euro zone crisis drags on, the S&P 500 was on track for its best month since October, helped by stronger U.S. economic data.
Swiss engineering group ABB
Consumer spending, the main pillar of the U.S. economy, was flat in December as households added to savings after the largest rise in income in nine months. Although the data pointed to a slow start for spending in 2012, economists were cautiously optimistic that an improving labor market will support demand.
(Editing by Kenneth Barry)