Stocks edged lower on Tuesday after a strong start to the second quarter and ahead of the release of minutes from the most recent meeting of the Federal Reserve's policy-setting committee.

Commerce Department data reinforced the view the domestic economy was slowly improving as new orders for U.S. factory orders rebounded in February, although the increase was short of expectations.

What we've seen is a whole series of datapoints over the last six months that were just getting better every week, and the last month or so we've seen some datapoints that are slowing down a little bit, but nothing alarming, said Doug Foreman, director of equities at Kayne Anderson Rudnick Investment Management in Los Angeles.

The market has just had a big move here, (is) probably pausing, the pause that hopefully refreshes.

The Dow Jones industrial average <.DJI> was down 60.44 points, or 0.46 percent, at 13,204.05. The Standard & Poor's 500 Index <.SPX> was off 6.67 points, or 0.47 percent, at 1,412.37. The Nasdaq Composite Index <.IXIC> dipped 5.63 points, or 0.18 percent, at 3,114.07.

Financials were among the worst performers at midday. Morgan Stanley lost 1.7 percent to $19.47 after the Federal Reserve said it was taking an enforcement action against the company for the way one of its mortgage servicing units handled home loans.

The S&P financial sector index <.GSPF> dropped 1 percent.

Investors awaited minutes from the U.S. Federal Open Market Committee's March 13 meeting, due at 2 p.m. EDT (1800 GMT), that may provide clues on any potential quantitative easing.

Federal Reserve policymakers on Monday signaled little appetite for further monetary steps to stimulate U.S. growth in an economy that is gradually strengthening.

General Motors Co fell 3.6 percent to $25.79 while Ford Motor Co edged up 0.6 percent to $12.69 after auto sales continued a robust pace in March.

On Monday, the S&P 500 closed at its highest since mid-May 2008. The Dow scored its highest finish since December 31, 2007, while the Nasdaq once again closed at levels not seen since late 2000.

(Reporting By Chuck Mikolajczak; editing by Jeffrey Benkoe)