"Slow growth and higher non-energy-related prices could be a relevant conversation in 2008," said Kevin Giddis, managing director at Morgan Keegan & Company Inc.
The Dow Jones Industrial Average was off 57 points at 13,383, with 25 of its 30 components trading lower, led by Caterpillar Inc. , which fell 2% after its downgrade to underweight from equal-weight by Morgan Stanley.
The S&P 500 declined 9.08 points to 1,458.87, while the Nasdaq Composite dropped 12.67 points to 2,623.07.
Data before the start of trading showed the New York Federal Reserve Bank reporting factory growth in the region slowed in December to its lowest reading since May.
And the Commerce Department said the U.S. current account deficit narrowed in the third quarter to $178.5 billion, or 5.1%, of gross domestic product. .
U.S. stocks closed sharply lower on Friday, as rising inflation dismayed investors already concerned that credit-market turbulence may prompt a recession. The Dow industrials fell 178 points, the S&P 500 lost 20 points and the Nasdaq Composite fell 32 points.
In televised interviews Sunday, Greenspan, former chairman of the Federal Reserve, warned of the possibility of stagflation, when prices rise at the same time as the economy cools, and said there was a 50-50 chance of a U.S. recession.
In Europe, shares fell as worries about rising inflation coincided with mounting credit-market turmoil. .
Asian stocks fell, with Japan's Nikkei Stock Average losing ground as banking shares declined. Australian markets faced heavy selling pressure from commodity stocks. .
By Kate Gibson