Stocks slipped on Monday, erasing earlier gains as China's weakening demand for materials and concerns over Europe's fiscal issues weighed on sentiment.
Investors looked ahead to the start of earnings season, which starts after the closing bell when Dow component Alcoa Inc reports its second-quarter results.
Other Dow components set to report earnings this week include Intel Corp , JPMorgan Chase & Co and General Electric Co .
I get the feeling a lot of people are on edge. They're tentative. No one really knows what to expect with this quarter's earnings, said Paul Brigandi, a trader with Direxion Funds in New York.
Alcoa fell 0.7 percent to $10.86.
Stocks rose in early trading, lifted by a rally in tech stocks and merger news, though gains were later erased, continuing a recent trend where advances tapered off throughout the session.
The S&P Materials index <.GSPM> slid 1.1 percent after Chinese data over the weekend showed the country's copper demand dropped, sending Freeport McMoRan Copper & Gold Inc down 4.3 percent to $63.12.
The Dow Jones industrial average <.DJI> was down 12.19 points, or 0.12 percent, at 10,185.84. The Standard & Poor's 500 Index <.SPX> was down 2.40 points, or 0.22 percent, at 1,075.56. The Nasdaq Composite Index <.IXIC> was down 1.96 points, or 0.09 percent, at 2,194.49.
For the second quarter, analysts see earnings growth of 27 percent for companies in the S&P 500, according to Thomson Reuters data, up from previous readings in the past three quarters, which hovered around 22 percent. This would also exceed the 22.4 percent analysts were predicting at the beginning of the year.
News that Aon Corp will buy Hewitt Associates Inc for $4.9 billion in cash and stock limited the market's decline, with Hewitt up 31.6 percent to $46.60. [ID:nSGE66B0DN] The acquisition will create the world's largest human resources company.
Playboy Enterprises shares surged 40.9 percent to $5.58 after owner Hugh Hefner offered to take the adult entertainment company private.
U.S.-listed shares of BP Plc rose 7.5 percent to $36.62 after the British company said it plans to put a new cap on the oil leak in the Gulf of Mexico and a report that BP was in talks with U.S. oil and gas company Apache Corp over potential asset sales to help pay for the cost of the leak.
The market's slight pullback on Monday comes after Wall Street closed out its best week in a year on Friday.
We recovered from a market that was vastly oversold, and now we're in a transition of an extended bottoming phase, said Steve Goldman, market strategist for Weeden & Co. in Greenwich, Connecticut. It's going to take time to complete this transitional phase.
At midday, decliners outnumbered advancers by a ratio of slightly more than 2 to 1 on both the New York Stock Exchange and the Nasdaq.
(Editing by Jan Paschal)