"This holiday season is not going to be a gangbuster," said Lindsey Piegza, chief economist of Sterne Agee. "Retailers are bracing for declining activity from now to the beginning of the year."
The Dow Jones industrial average slipped 42 points, or 0.3 percent, to 16,044 at 2:20 p.m. Eastern Standard Time. The Standard & Poor's 500 index was essentially unchanged at 1,805. The Nasdaq composite fell 11 points, or 0.3 percent, to 4,048.
Investors sold stocks at the start of trading Monday. They then inched back into the market after the government reported that developers boosted construction spending in October at the fastest pace in more than four years. A separate survey showed that manufacturing activity rose at its fastest pace in 2 ½ years.
If the afternoon trends hold, it would be a lackluster start to what is usually a good month for the market. In December, the Dow has risen three out of every four years going back to 1950, according to the Stock Trader's Almanac. The average gain for the month: 1.7 percent.
The Dow has surged 22 percent this year as the economy maintains a slow but steady recovery and companies continue to increase earnings. Demand for stocks also has been bolstered by Federal Reserve purchases of $85 billion of bonds each month. The goal is to hold down interest rates, make bonds less attractive than stocks, and stimulate the economy.
Stock investors are waiting for a government report on jobs Friday for clues about whether the stimulus policy is working and when the Fed will ease off its bond purchases. Investors have sold on days when they feared a Fed pullback was imminent.
In government bond trading, the yield on the 10-year note climbed to 2.80 percent, from 2.75 percent. The yield was as low as 1.63 percent in early May.
Among the biggest decliners on Monday were phone companies. Investors typically buy those stocks because they pay big dividends, providing income. Interest rates climb investors sell them because that income is less attractive in comparison to higher bond yields.
Other stocks making big moves:
Forest Laboratories surged $3.63 to $54.94, or 7 percent, the biggest gain in the S&P 500. The drugmaker expects to cut jobs as part of a plan to trim $500 million in costs, and spend at least $400 million buying back its stock.
Dow Chemical rose $1.14 cents, or 3 percent, to $40.20. The company plans to either sell or spin off about 40 manufacturing plants as it moves away from making cyclical commodities, products whose demand is closely tied to the ebbs and flows of the economy.