"All eyes are trained on the Fed's policy statement on Wednesday to see how strongly it hints at a pause in the easing cycle after an expected 25 bps rate cut to 2.0%," said Sal Guatieri, economist at BMO Capital Markets.
Economic data, meanwhile, may reveal the U.S. economy is in recession. On Wednesday, first-quarter gross production data may reveal the economy has already contracted. On Friday, investors expect jobs data to reveal another bid drop in payrolls in April.
Early selling pressure offset enthusiasm for a buyout of Wm. Wrigley Jr. by privately-held Mars and Warren Buffett's Berkshire Hathaway .
The Dow Jones Industrial Average was down 20 points at 12,871, with 17 of its 30 components falling, led by a 2% drop in shares of AIG , a 1.6% fall in shares of Dupont , and a 1% drop in Microsoft shares.
General Motors was among the biggest gainers among blue chips, rising 2.2%. Shares of rival Ford Motor Co. gained 10%, with Kirk Kerkorian's Tracinda said it is planning to offer $8.50 per share for up to 20 million of its shares.
The S&P 500 index was down 2.2 points, or 0.2%, at 1,395, while the Nasdaq Composite fell 2.7 points, or 0.1%, at 2,420.
Energy was among the rising sectors, with crude oil futures remaining higher, after earlier hitting a new record high of $119.93 a barrel, boosted by a refinery strike in the UK and violence in Nigeria.
On Friday, stocks finished mostly higher, with the Dow rising 42 points and the S&P 500 up 9 points. Microsoft's cautious outlook dragged the Nasdaq Composite down about 6 points.
Attention on Monday turns to the Federal Reserve, days away from a possible quarter-point rate cut.
Two-thirds of respondents to a money manager poll from Ried Thunberg Icap think the FOMC will imply a pause in rate cuts is likely after making a quarter-point cut on Wednesday.
Of stocks in focus, privately held Mars and Warren Buffett's Berkshire Hathaway said they would buy Wm. Wrigley Jr. Co for about $23 billion, or $80 a share.
Continental Airlines said it has no plans to merge with another airline, apparently scuttling rumors of a possible hookup with United Airlines parent UAL Corp. . Continental shares dropped over 5% in pre-market trade, as did UAL.
UAL is continuing merger discussions with US Airways Group , The Wall Street Journal reported.
The three-week deadline that Microsoft Corp. gave Yahoo Inc. to come to an agreement on its unsolicited bid for the Internet media company passed without any announcement from either side, leading to the possibility that the battle for Yahoo is about to turn hostile.
On the earnings front, Verizon Communications reported a 10% profit rise, helped by the performance at its 55%-held Verizon Wireless unit. Vodafone Group owns the rest of the mobile operator that signed up 1.5 million customers during the most recent quarter.
The Nikkei 225 ended with a 0.2% rise in Tokyo and the FTSE 100 added 0.7% in London.
By Nick Godt