The Dow Jones industrial average (search) dropped 54.70 points, or 0.51 percent, to end at 10,596.48. The Standard & Poor's 500 index (search) fell 4.65 points, or 0.38 percent, to finish at 1,229.03. The technology-laced Nasdaq Composite Index (search) lost 13.00 points, or 0.60 percent, to close at 2,166.74.
"To a larger degree, good earnings have been priced in already," said James Park, director of institutional trading at Rodman & Renshaw in New York, who added that the companies' whose stocks are faring really well "are the ones projecting pretty good guidance."
Investors were nervous about oil after crude futures' rally on Friday. So stocks gave up early gains as oil crept upward; futures finally closed at $59 a barrel, up 35 cents on the New York Mercantile Exchange (search).
The gain in crude prices helped shares of energy producers such as ConocoPhillips , Chevron Corp. and Exxon Mobil Corp. (XOM), while it weighed on the stocks of heavy oil consumers like manufacturers Caterpillar Inc. (CAT) and 3M Co. (MMM).
ConocoPhillips (COP) added 1.6 percent, or 98 cents, to $62.23, while Chevron gained 1 percent, or 58 cents, to $58.37, and Exxon Mobil rose 0.7 percent, or 44 cents, to $59.94, all on the NYSE. In contrast, Caterpillar shed 1.1 percent, or 56 cents, to $51.85, while 3M slid 0.7 percent, or 54 cents, to $74.17.
But American Express Co. (AXP) , a Dow component, ended little changed at $54.56 after the company said its profit hit a new record.
Texas Instuments (TXN) reported better-than-expected earnings and declared a 20 percent increase in its dividend after 4 p.m., when the regular trading session ended. The company's shares were halted in after-hours trading, after closing on the NYSE at $30.60, down 0.5 percent, or 16 cents.
Shares of BlackBerry maker Research in Motion Ltd. (RIMM) slid 4.7 percent, or $3.38, to $68 on the Nasdaq after an article in Barron's said Motorola Inc. is set to roll out a competing wireless e-mail device. Motorola's (MOT) shares gained 2.7 percent, or 54 cents, to close at $20.54 on the NYSE.
Second-quarter earnings for the S&P 500 companies are on track for a double-digit percentage increase for the 13th straight quarter, according to Reuters Estimates.
No. 3 U.S. telecommunications company BellSouth Corp.'s (BLS) stock ended up 0.3 percent, or 9 cents, at $26.81 after the company posted earnings that were down, but not as sharply as analysts had feared.
Maytag gained 4.9 percent, or 80 cents, to $17 on the NYSE after the appliance maker said a sweetened $18-a-share buyout offer from Whirlpool Corp. "may reasonably be expected" to lead to a better deal than its pending $14-a-share pact with a group led by Ripplewood Holdings. Whirlpool shares jumped 7.1 percent, or $5.50, to $82.68.
News about the broader economy continued to be good. Sales of existing homes set a new record in July with prices shooting up at the fastest pace in nearly 25 years. The torrid sales pace helped to push the median price of an existing home up to a record of $219,000 last month, a gain of 14.7 percent from the median, or midpoint, for prices a year ago. That was the biggest jump in prices since November 1980.
Bonds were flat, with the yield on the 10-year Treasury note at 4.22 percent. The U.S. dollar was down against other major currencies in European trading. Gold prices were higher.
Pilgrim's Pride (PPC) reported second-quarter earnings that topped Wall Street forecasts. Its shares rose 4.6 percent to $38.55 on the New York Stock Exchange.
Generic drug maker Teva Pharmaceutical Industries Ltd. (TEVA) rose 7 cents to $31.23 after it said it is acquiring rival Ivax Corp. in a cash-and-stock deal worth about $7.4 billion. The price is about a 14 percent premium to Ivax's closing price of $22.88 on Friday. Ivax rose $2.29 to $25.17.
Wal-Mart Stores Inc.(WMT), the world's biggest retailer, fell 9 cents to $49.45 after the company said it plans to open another 42 stores in China by the end of next year, nearly doubling its presence in the country, a senior company official said Monday.
Trading was moderate on the NYSE, with about 1.3 billion shares changing hands, below last year's daily average of 1.46 billion, while on Nasdaq, about 1.53 billion shares traded, below last year's daily average of 1.81 billion.
Declining stocks outnumbered advancing ones by a ratio of almost 2 to 1 on both the NYSE and Nasdaq.
The Russell 2000 index of smaller companies fell 6.79, or 1 percent, to 670.99.
Overseas, Japan's Nikkei stock average rose 0.58 percent. Britain's FTSE 100 was up 0.55 percent, Germany's DAX index was up 0.12 percent, and France's CAC-40 was up 0.15 percent.
Reuters and the Associated Press contributed to this report.