"We have a Fed decision on Tuesday; who is going to make a big bet now? So we have a lot of folks sitting on their hands," said Art Hogan, chief market strategist at Jefferies & Co.
The Dow Jones Industrial Average was recently off 3.8 points at 13,616.1, with 16 of its 30 components trading lower, with American Express Co. fronting the blue-chip index's drop, its shares down 5.1%.
Amex's decline followed a downgrade by Merrill Lynch analysts, who advised clients to sell its stock as well as shares of Discover Financial Services and Capital One Financial Corp. on the view that consumer spending would deteriorate and lead to a recession next year. .
After rising early on, stocks fell as investors resorted to profit-taking after a two-day rise amid diverse data, including slight payrolls growth in November and a drop in consumer sentiment in December.
"We're looking at a market that is getting a little overstretched, so I wouldn't be surprised to see some profit-taking," said Peter Cardillo, chief market economist at Avalon Partners.
The S&P 500 fell 3.26 points to 1,504.08, while the technology-heavy Nasdaq Composite declined 9.33 points to 2,699.7.
Volume on the New York Stock Exchange neared 656 million shares, with declining stocks edging ahead of those advancing 8 to 7. On the Nasdaq, 1.1 billion shares traded hands, and decliners topped advancers 4 to 3.
U.S. equities have risen in recent days, with the Dow climbing 371.16 points during the past two sessions, with investors anticipating the Federal Reserve would cut interest rates for a third time this year at its next meeting on Tuesday. .
Ahead of the opening bell, the Labor Department reported the addition of 94,000 nonfarm payroll jobs last month and said the unemployment rate held steady at 4.7%. Economists expected the rate to climb to 4.8%. .
The data "points to an economy that is not slipping into a recession anytime soon, but we're likely to see some sort of a pullback here because most of the news is already digested, and a rate cut is already priced in," said Cardillo.
A later survey released by Reuters and the University of Michigan had consumer sentiment continuing to drop in December, with an index falling to 74.5 last month from 76.1 in November. The latest reading proved worse than the forecasted 75 level, and is the second lowest since 1992. .
"Surging gasoline prices, falling stock prices, and lingering credit market turmoil are continuing to weigh on this measure," said analysts at Action Economics.
On the New York Mercantile Exchange, crude-oil futures fell, with the contract for January delivery recently off $2.81 at $87.42. .
Elsewhere on the NYME, gold futures declined $6.7 to $800.4.
A shipping delay for one of its products was among the factors weighing on one tech stock. Palm Inc. shares were off 11.2% in the wake of its late-Thursday announcement, which included word of a net loss for its latest quarter. .
European stocks returned to gains after a one-day hiatus, helped by Thursday's strong finish for U.S. stocks. .
In Asia, stocks closed mostly higher. .
By Kate Gibson