The S&P 500 and Nasdaq fell on Monday as economic data in China and a Federal Reserve monetary policy statement due later this week gave traders reason to pause after a three-day rally.
China's trade balance plunged $31.5 billion into the red in February as imports swamped exports to leave the largest deficit in at least a decade and fuel doubts about the extent to which frail foreign demand or seasonal distortion drove the drop.
The data cast some doubt on global economic growth prospects after Friday's US payrolls report pointed to an improving domestic economy and pushed equities to their fourth straight weekly gain.
Investors will also eye Tuesday's statement from the US central bank's Federal Open Market Committee for signs the Fed will tamp down expectations of more easing, which might make it difficult to extend the rally.
"People are somewhat weary ahead of tomorrow's FOMC meeting," said Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Illinois. "Not that they expect any ground breaking news out of it, it's just the normal caution ahead of a Fed meeting."
Markets were recently rattled after Fed Chairman Ben Bernanke stopped short of giving a strong signal of more stimulus during Congressional testimony.
The Dow Jones industrial average edged up 15.82 points, or 0.12%, to 12,937.84. But the broader S&P 500 Index dipped 2.77 points, or 0.20%, to 1,368.10 and the Nasdaq Composite fell 13.67 points, or 0.46%, to 2,974.67.
Bank stocks were among the day's biggest losers as a report looms from the Fed on the capital adequacy of the largest lenders.
Jankovskis said there was speculation the Fed was contemplating more aggressive downside scenarios than the banks had presented. "That could prevent some of the banks from upping dividends or engaging in buybacks, and in some cases might actually require them to go back to the market to raise capital."
The S&P financial sector fell 0.7%, with JPMorgan Chase down 1.8% at $40.28 and Bank of America off 0.7% at $7.99.
Oil prices retreated, with Brent hovering near $125 a barrel global economy and demand worries overshadowed hopes Middle East supply concerns would ease.
Tidewater Inc's shares slumped 4.8% to $55.74 after the offshore vessels provider said Sonatide, its partnership with Angola's state oil company, will not take up new charters or extend existing ones in the country until the two parties resolve ongoing joint venture talks.
The PHLX oil service index fell 2.2%.
Molycorp Inc is set to buy Neo Material Technologies Inc in a $1.3 billion cash-and-share deal that will give Molycorp access to Neo Material's rare earth processing capabilities and patents. Molycorp edged up 0.6% to $31.09.
Youku Inc rose 12.7% to $28.18 after China's largest online video company said it will buy second-ranked Tudou Holdings Ltd in an all-stock deal valued at more than $1 billion. Tudou shares shot up 142% to $37.40.