The market appeared to be taking a break after last week's sharp rally, when tame inflation data pushed the Dow Jones industrial average to its biggest three-day point gain since November 2004. With little significant economic data due at the start of the week, investors were left searching for a catalyst to extend the rally.

Treasury yields have moved higher over the past few weeks on concerns that inflation is stubbornly high and the economy is rebounding, trends that make it unlikely the Federal Reserve will lower interest rates. The yield on the benchmark 10-year Treasury note traded as high as 5.18 percent Monday before closing at 5.15 percent, just below Friday's 5.16 percent.

"There's a very strong correlation between yields and the stock market these days, and that will likely be the case until investors get more comfortable," said Mike Malone, trading analyst at Cowen & Co.

Investors were somewhat encouraged by a fresh round of acquisition news in a year that so far is on a record-setting pace. Alcoa Inc., the world's second-biggest aluminum producer, jumped on talk it might again be the target of a takeover bid by Australian mining company BHP Billiton Ltd. Meanwhile, General Electric Co. and Pearson PLC is said to be mulling a joint $5 billion bid for Dow Jones & Co.

According to preliminary calculations, the Dow fell 26.50, or 0.19 percent, to 13,612.98.

Broader stock indicators were also slightly lower. The Standard & Poor's 500 index fell 1.86, or 0.12 percent, to 1,531.05, and the Nasdaq composite index fell 0.11, or less than 0.01 percent, to 2,626.60.

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