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The markets wavered on Monday as traders weighed talk that the Fed is working on plans to begin winding down QE3 with a round of strong retail sales data.
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As of 3:24 p.m. ET, the Dow Jones Industrial Average fell 39.4 points, or 0.26%, to 15079, the S&P 500 dipped 1.3 points, or 0.08%, to 1632 and the Nasdaq Composite declined 0.83 point, or 0.02%, to 3436.
The major market averages posted their third-straight advance last week, with the Dow and S&P 500 closing at record highs. The pace of economic and corporate headlines was slow, but expected to pick up dramatically this week.
Late Friday, The Wall Street Journal reported Federal Reserve officials are fine tuning a plan to wind down its vast asset-purchase program, dubbed QE3, in which it currently buys bonds at a clip of $85 billion a month in a bid to pressure interest rates at the long end of the curve. The report said some officials envision a tapering of the program as early as this summer, depending on how well the economy fares through tax increases that became law this January.
Analysts at Nomura, a Japan-based bank, cited the discussion of Fed tapering as a reason for the strength of the U.S. dollar against many world currencies, including the euro, on the day.
Traders were also mulling a report from the Commerce Department showing U.S. retail sales rose 0.1% in April from March, beating expectations of a fall of 0.3%. Excluding the auto segment, sales were down 0.1%, which matched estimates.
"It remains to be seen how much of the April increase will break down into real activity as opposed to shifts in prices, but it certainly suggests that, despite some softening, households have persisted with a solid pace of spending despite the tax increases faced at the start of the year," Peter Newland, an economist at Barclays wrote to clients following the report. The UK-based investment bank said the data imply that the second quarter started on a "strong note."
Another report showed business inventories were unchanged in March from February, compared to estimates of a 0.3% gain. Business sales fell 1.1% on the same basis in the biggest drop since June 2012. The report is seen as an indicator of how strong businesses expect demand to be. It also figures into first-quarter gross domestic product estimates.
Elsewhere, in corporate news, FOX Business' Charlie Gasparino reported over the weekend that J.P. Morgan Chase's (NYSE:JPM) board of directors is weighing its options for what to do if shareholders back a plan by certain activist investors to break up the chairman and chief executive roles currently held by Jamie Dimon. Sources familiar with the matter told Gasparino Dimon is still very likely to stay with the biggest U.S. bank by assets even if the split does occur.
Dell's (NASDAQ:DELL) special committee asked activist investor Carl Icahn and Southeastern Asset Management for "additional information" about an alternative plan they proposed that competes with a take-private deal led by founder Michael Dell.
In commodities, U.S. crude oil prices slipped 48 cents, or 0.5%, to $95.55 a barrel. Wholesale New York Harbor gasoline slid 0.92% to $2.835 a gallon. In metals, gold dropped $4, or 0.28%, to $1,432 a troy ounce.
The Euro Stoxx 50 dipped 0.48% to 2772, the English FTSE 100 fell 0.23% to 6610 and the German DAX slipped 0.42% to 8244.
In Asia, the Japanese Nikkei 225 rallied 1.2% to 14782 and Chinese Hang Seng sold off by 1.4% to 22990.