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The Dow Jones industrial average fell 36.86 points, or 0.2 percent, to 15,521.97. The Nasdaq composite dropped 14.02 points, or 0.4 percent, to 3,599.14.
Investors will also be focusing on corporate earnings this week.
Just over half of the companies in the S&P 500 index have reported earnings for the second quarter. Analysts are currently forecasting earnings growth of 4 percent for the April-through-June period, according to S&P Capital IQ. That's the slowest rate of growth in three quarters.
In government bond trading, the yield on the 10-year Treasury note rose to 2.59 percent from 2.56 percent Friday. The note's yield, which moves inversely to its price, has climbed almost 1 percentage point since the start of May, when it hit its low point of the year, 1.63 percent.
Higher government bond rates push up mortgage rates, which could threaten the housing recovery.
The number of Americans who signed contracts to buy homes dipped in June from a six-year high in May, the National Association of Realtors said Monday. The slight decline suggests higher mortgage rates may be starting to slow sales.
Should rates rise too quickly the Fed will likely keep up with its stimulus for longer, said Colleen Supran, a principle at Bingham, Osborn and Scarborough, a wealth management firm.
"We really need the housing market to stay on track to keep economic growth on track," said Supran.
In commodities trading, crude oil fell 15 cents, or 0.1 percent, to $104.55 a barrel. Gold climbed $6.90, or 0.5 percent, to $1,328.70 an ounce.
The dollar gained against the euro, but fell against the Japanese yen.
Among other stocks making big moves:
— CF Industries rose $21.30, or 12 percent, to $202.30 after reports that Third Point, the hedge fund of the activist investor Daniel Loeb, had bought a stake in the company. Loeb disclosed the purchase in a quarterly letter to investors.