U.S. stocks fall on Federal Reserve uncertainty; Dow dips 0.24%

U.S. stocks closed lower on Monday after investors avoided equities ahead of the Federal Reserve's Wednesday announcement on interest rates and monetary policy, which many hope will provide more guidance as to when stimulus measures may end.

At the close of U.S. trading, the Dow Jones Industrial Average finished down 0.24%, the S&P 500 index fell 0.37%, while the Nasdaq Composite index fell 0.39%.

Uncertainty over when the Federal Reserve will begin to taper monetary stimulus programs such as its monthly USD85 billion bond-buying program watered down equities prices.

Monthly asset purchases tend to drive down borrowing costs across the economy, making stocks rise as a side effect, though uncertainty was when the U.S. central bank will unwind such programs largely sent investors avoiding stock prices on Monday.

Elsewhere on Monday, the National Association of Realtors reported that pending home sales in the U.S. fell 0.4% in June, less than an expected 1% decline but below a 5.8% rise the previous month, which added to the uncertainty surrounding the Federal Reserve's plans for the economy, dampening appetite for stocks throughout the session.

Leading Dow Jones Industrial Average performers included Caterpillar, up 1.18%, Verizon Communications, up 0.94%, and UnitedHealth Group, up 0.79%.

The Dow Jones Industrial Average's worst performers included Bank of America, down 1.36%, Hewlett-Packard, down 1.27%, and Chevron, down 1.05%.

European indices, meanwhile, finished mixed.

After the close of European trade, the EURO STOXX 50 fell 0.01%, France's CAC 40 rose 0.11%, while Germany's DAX 30 finished up 0.17%. Meanwhile, in the U.K. the FTSE 100 finished up 0.08%.