Stocks were flat on Monday as economic data in China and this week's Federal Open Market Committee announcement gave investors reason to pause after a three-day rally.
China's trade balance plunged $31.5 billion into the red in February as imports swamped exports to leave the largest deficit in at least a decade and fuel doubts about the extent to which frail foreign demand or seasonal distortion drove the drop.
The data cast some doubt on global economic growth prospects after Friday's U.S. payrolls report pointed to an improving domestic economy and pushed equities to their fourth straight weekly gain.
Investors will also eye Tuesday's statement from the central bank's Federal Open Market Committee for any indications in the direction on monetary policy.
This is definitely the market in pause mode, looking for anything out of the FOMC which is going to give the market some sort of direction in terms of - not rates so much because that is a foregone conclusion - but direction in terms of guideposts for rate change, said Peter Kenny, managing director at Knight Capital In Jersey City, New Jersey.
Let's not forget we are up very nicely for the year, and we are not up without good reason - earnings have been good, there had definitely been some modest improvement in the domestic economy as evidenced by Friday's jobs number - and the market needs to digest that.
Stocks were rattled recently after Federal Reserve Chairman Ben Bernanke stopped short of giving a strong signal of more stimulus during testimony in front of the House of Representatives Financial Services Committee.
The Dow Jones industrial average gained 10.82 points, or 0.08 percent, to 12,932.84. The Standard & Poor's 500 Index dropped 0.73 points, or 0.05 percent, to 1,370.14. The Nasdaq Composite Index dropped 0.64 points, or 0.02 percent, to 2,987.70.
Oil prices retreated, with Brent crude below $125 a barrel as Middle east supply concerns eased, overshadowed by global economy and demand worries. The PHLX oil service index slipped 1.2 percent, led lower by a 4.2 percent drop in Tidewater Inc.
Japan's Asahi Kasei Corp will buy U.S. medical equipment maker Zoll Medical Corp for $2.21 billion as Asahi Kasei looks to build a globally competitive healthcare business and reduce its reliance on its chemicals and fiber operations. Zoll climbed 23.7 percent to $92.89.
Molycorp Inc is set to buy Neo Material Technologies Inc in a C$1.3 billion ($1.31 billion) cash-and-share deal that will give Molycorp access to Neo's rare earth processing capabilities and patents. Molycorp was flat at $30.89.
Youku Inc jumped 25 percent to $31.26 after China's largest online video company said it will buy second-ranked Tudou Holdings Ltd in an all-stock deal valued at more than $1 billion. Tudou shares more than doubled to $39.23.
PepsiCo Inc said it was taking the essential step of changing its global structure by creating the new job of president to integrate its sprawling operations worldwide and was bringing back a former executive to head its food and snacks business in the Americas. Shares gained 0.4 percent to $63.39.
(Editing by Padraic Cassidy)