The Dow Jones Industrial Average fell 46.46 points, or 0.14 percent, to 34,051.7. The S&P 500 sank 1.61 points, or 0.04 percent, to 4,167.87. The Nasdaq Composite Index shed 13.99 points, or 0.11 percent, to 12,212.6.
Six of the 11 primary S&P 500 sectors ended in red, with energy and consumer discretionary sectors leading the laggards down 1.26 percent and 1.06 percent, respectively. Meanwhile, health and industrials sector led the gainers up 0.59 percent and 0.55 percent, respectively.
The Federal Open Market Committee (FOMC) meeting is expected to hike interest rates by 25 basis points on Wednesday, which would add more downward pressures on the U.S. economy.
"The Fed will likely be confident banking jitters are fading, but given the recent boost of inflationary pressures, they might hold off signaling they are ready to hold rates steady after one more hike. The Fed might choose to remain vigilant and that is something this market is not ready to price in," said Edward Moya, senior market analyst at OANDA, a supplier of online multi-asset trading services.
JPMorgan Chase announced on Monday it has acquired the substantial majority of assets and assumed the deposits and certain other liabilities of First Republic Bank from the Federal Deposit Insurance Corporation (FDIC).
The San Francisco-based First Republic Bank was closed by the California Department of Financial Protection and Innovation early Monday with the FDIC appointed as the receiver.
The rescue deal of First Republic Bank has not changed the odds of a recession, but that it will help to stabilize the system, according to Jamie Dimon, chief executive officer of JPMorgan Chase.
Moreover, U.S. manufacturing purchasing managers' index (PMI) improved to 47.1 in April from 46.3 in March, beating market forecast consensus of 46.8, according to a release by Institute for Supply Management on Monday.
The yield of 10 year U.S. Treasury bonds jumped 14.99 basis points on Monday, weighing on the market sentiment.
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