Stocks edged lower on Monday as investors found little reason to extend a five-week rally on lingering uncertainty over whether Greece would accept the terms of a bailout.
Another deadline lapsed in Athens as political leaders failed to respond to bailout terms from the European Union and International Monetary Fund. Greece needs the funds by March in order to meet big debt repayments and avoid a messy default.
The S&P's recent rally had been helped by a run of better-than-expected U.S. economic data, which was capped by Friday's solid employment report. Recent actions by central banks in Europe and the United States to maintain loose monetary policies have also helped reduce volatility in equity markets.
But the S&P's rise of 7 percent so far this year, along with worries over Europe's ability to resolve its debt crisis and some weak corporate results, has kept many investors at bay.
We've had an ultra-strong move, and I think it would be prudent to take some hedges to protect yourself, said Randy Bateman, chief investment officer of Huntington Asset Management in Columbus, Ohio, who helps oversee $14.5 billion in assets. There will be more negativity if the deal doesn't go through, even if the market has been driven more by earnings than Europe lately.
The Dow Jones industrial average was down 42.38 points, or 0.33 percent, at 12,819.85. The Standard & Poor's 500 Index was down 2.74 points, or 0.20 percent, at 1,342.16. The Nasdaq Composite Index was down 4.55 points, or 0.16 percent, at 2,901.11.
Hasbro Inc rose 2.3 percent to $36.68 after the toymaker reported a fourth-quarter profit just above analysts' lowered expectations.
Humana Inc posted a big rise in fourth-quarter profit, but revenues came in below the Wall Street view, sending shares down 5.8 percent to $84.94. The Morgan Stanley healthcare payor index lost 1.6 percent.
Through Monday morning, of the 290 companies in the S&P 500 that have reported results so far for the quarter, 60 percent posted profits that topped expectations, tracking below recent quarters at this point of the earnings season.
Technical analysts at Instinet in New York said a host of metrics, such as an upturn in the S&P 500's moving averages and a strong move up in January, boded well for equity prices in the medium term.
The persistency of both price appreciation and breadth since the beginning of the year suggests the next pullback will be a precursor to another attack on the 2011 highs in the S&P 500 near 1,370, the firm wrote in a note.
Fidelity National Financial Inc agreed to buy casual dining chain O'Charley's Inc for $9.85 a share, valuing the company at $221 million. The title insurer already owned a 9.5 percent stake. Shares of O'Charley's surged 42 percent to $9.82.
Semiconductor stocks lost ground, dragged down by Micron Technology Inc whose chief executive died on Friday in the crash of a small plane he was piloting. Micron shares fell 1.5 percent to $7.83 while the PHLX semiconductor index dropped 1.4 percent.
(Editing by Leslie Adler)