By JeeYeon Park, CNBC News Associate
Stocks turned negative in the final hour of trading to close lower Monday amid light volume, as techs and worries over geopolitical turmoil weighed.
Disney and Home Depot slipped, while AT&T and Verizon led the gainers on the blue-chip index.
The S&P 500 slipped 3.61 points, or 0.27 percent, to close at 1,310.19 and the tech-heavy Nasdaq declined 12.38 points to end at 2,730.68. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose to trade near 19.
Among the S&P sectors, consumer discretionaries, techs and materialsslid, while telecom gained.
“Average investors are not involved in the market," J.J. Burns, president of J.J. Burns & Company told CNBC, pointing to light volume in the market. "Ultimately, when inflation lasts a little longer, we will have reduced margins and prices and we’ll see stock prices lower quite a bit.”
In Libya, rebels pushed west over the weekend to retake a series of towns from the forces of Muammar Gaddafi who have been pounded by Western air strikes, while in Syria, President Bashar al-Assad deployed the army in the country's main port of Latakia for the first time after nearly two weeks of protests spread across the country.
President Obama will make a national televised address Monday evening at 7:30 pm ET to defend U.S. participation in NATO mission in Libya. (CNBC.com will be streaming the event live.)
NATO on Sunday assumed full responsibility for military operations in Libya, ending uncertainty about who would lead the effort.
Oil prices retreated, with U.S. crude trading below $104 and Brent crude under $115 a barrel, after Libyan rebels regained control of key oil towns and the dollar strengthened on hawkish comments from a U.S. central banker. Gold prices fell below $1,418 an ounce.
The energy sector has fully rebounded, hitting a 2-1/2 year high today, with a number of stocks hitting new highs including ConocoPhillips and Chevron.
The telecom sector led the markets higher after Robert W. Baird upgraded a number of companies to "outperform," including Dow components AT&T and Verizon, saying AT&T's deal to buy T-Mobile would help stabilize the hyper-competitive industry.
In addition, Alcatel-Lucent shares jumped almost 10 percent after the telecom-equipment stock was upgraded to "buy" from "neutral" by Goldman Sachs. And Nokia gained after Goldman Sachs upgraded the stock to "buy," citing the handset maker's long-term growth potential.
Eastman Kodak surged after a U.S. trade panel agreed to review the company's claim that Research In Motion and Apple are infringing on Kodak's patents.
In the meantime, Apple's Elk Grove, California distribution center was evacuated because of a bomb threat while emergency personnel search the three buildings on the scene. It is unclear how much longer the search will last.
On the M&A front, online auction giant Ebay announced it is buying GSI Commerce for $2.4 billion.
Meanwhile, Japanese stocks fell after the country was rocked by yet another 6.5 magnitude earthquake and fears over high levels of radiation at the crippled Fukushima reactor.
Wal-Mart Stores will re-open 12 stores of its Seiyu stores in Japan which were affected by the earthquake, and is hoping to re-open the remaining 12 stores as soon as possible, according to a spokesman for the retailer.
Meanwhile Deutsche Securities cut its forecasts for Toyota Motor, Nissan, Honda and other Japanese automakers. Meanwhile, Honda is recalling 2,800 of its Odyssey minivans to repair potentially faulty windows.
Meanwhile, treasury prices slipped after the government auctioned $35 billion of 2-year notes, which had a high yield of 0.789 percent and bid-to-cover of 3.16. The government is expected to auction 5-year and 7-year notes in the next two days.
In the day's economic news, pending home sales unexpectedly gained 2.1 percent in February, according to the National Association of Realtors. Economists had expected the index, which leads existing home sales by a month or two, to fall 1.0 percent after a previously reported 2.8 percent decline.
And U.S. consumer spending rose slightly more than expected in February for the eighth straight month of gains as households tapped their savings, according to government data, while inflation accelerated at its fastest pace since June 2009.
In the second half of the week, investors will shift their focus to the March jobs report, a very closely-watched economic indicator, which is due out Friday.
European shares finished higher amid low volume, led by tech stocks.