Stocks slipped on Monday on nagging worries the Chinese government may tighten credit, a move that could slow growth in the global economy.
Shanghai's key stock index fell to its lowest close in five weeks on Monday on expectations China's central bank would step up monetary tightening measures to stem inflation that is rising faster than expected.
On Sunday Chinese Premier Wen Jiabao said it would be difficult for China to promote fast growth and manage inflation expectations all at the same time.
I would have maybe expected us to be using the China news to draw this market down a little more, but I have to say it's an example of the strength the market has shown over the past several weeks, said Richard Sparks, senior equities analyst at Schaeffer's Investment Research in Cincinnati, Ohio.
Plus, we are near the top of that range where we petered out in mid-January so it's kind of a logical place to think the market will take a little bit of a pause here.
The S&P hit a 17-month high on Thursday above 1,150 but has been unable to climb above that level.
Banks stocks remained lower after Senate Banking Committee Chairman Christopher Dodd released a proposed financial regulation overhaul bill.
The KBW Banks index <.BKX> fell 0.2 percent while Dow component JPMorgan Chase & Co
The Dow Jones industrial average <.DJI> dropped 36.80 points, or 0.35 percent, to 10,587.89. The Standard & Poor's 500 Index <.SPX> fell 6.26 points, or 0.54 percent, to 1,143.73. The Nasdaq Composite Index <.IXIC> lost 19.35 points, or 0.82 percent, to 2,348.31.
The S&P Energy index <.GSPE> fell 1.6 percent and was the worst performer among S&P sectors as crude oil declined 1.8 percent on a stronger dollar.
Also weighing on energy stocks was Consol Energy Inc
Semiconductors were a drag on the Nasdaq as analysts lowered their ratings on several chip stocks, including downgrades of Lam Research Corp
Lam Research dropped 4.3 percent to $32.79, KLA-Tencor fell 5.2 percent to $27.91 and Atheros declined 4.4 percent to $35.58.
(Editing by Padraic Cassidy)