U.S. stocks dip as market digests Fed comments; Dow down 0.32%

U.S. stocks slid on Monday after investors digested comments from Federal Reserve officials to try and determine when the U.S. central bank will begin tapering the pace of its USD85 billion in monthly asset purchases, which boost stock prices by driving down borrowing costs.

At the close of U.S. trading, the Dow Jones Industrial Average finished down 0.32%, the S&P 500 index fell 0.47%, while the Nasdaq Composite index fell 0.25%.

Last Friday, St. Louis Fed President James Bullard said the Fed could decide at its October monetary policy meeting to taper its USD85 billion monthly asset-purchasing program.

The Federal Reserve will hold its next monetary policy meeting Oct. 29-30 but is not due to hold a press conference that day, which left many expecting a decision to taper asset purchases to come in December.

On Monday, however, Federal Reserve Bank of New York President William Dudley said monetary authorities want to be sure recovery is sustained before dismantling stimulus programs.

"In my view, the economy still needs the support of a very accommodative monetary policy.  Adjustments to that policy need to be anchored in an assessment of how the economy is actually performing, how financial conditions are evolving, and how this affects the longer-term outlook and the risks around it," Dudley said in prepared remarks of a speech he delivered Monday. 

"Our decisions on how to adjust our policy tools—for example, the pace of asset purchases and forward guidance with respect to the level of short-term rates—must be rooted in the ongoing flow of information that informs our judgments about the prospects for a sustainable recovery." 

Separately, Dallas Fed President Richard Fisher, a noted policy hawk, said the decision to keep the Fed's bond-buying program unchanged has damaged the institution's credibility.

Investors, meanwhile, spent the day digesting comments from all monetary authorities, which allowed for moderate declines on Wall Street.

Elsewhere, BlackBerry said it would be acquired by Canadian insurer Fairfax Financial for USD9 a share in a deal totaling USD4.7 billion.

On Friday, Blackberry shares plummeted after preliminary second-quarter results disappointed investors as did news the company plans to cut 4,500 jobs, or about 40% of its workforce.

Fiscal uncertainty in the U.S. dampened spirits as well.

Congress must agree on a spending package and lift the government's debt ceiling by the end of the month or risk throwing the country into default afterwards.

On Friday, the House of Representatives gave the green light to legislation to fund the government through Dec. 15, however, lawmakers voted to defund President Barack Obama's healthcare bill, the Affordable Care Act.

While the bill faces little chance of overall survival, the posturing sparked fears of brinkmanship and inaction that repelled investors from stocks ahead of a fiscal showdown brewing in the U.S.

Leading Dow Jones Industrial Average performers included UnitedHealth Group, up 1.79%, General Electric, up 1.21%, and 3M, up 0.95%.

The Dow Jones Industrial Average's worst performers included Goldman Sachs, down 2.61%, JPMorgan Chase, down 2.56%, and Coca-Cola, down 1.90%.

European indices, meanwhile, finished lower.

After the close of European trade, the EURO STOXX 50 fell 0.69%, France's CAC 40 fell 0.75%, while Germany's DAX 30 finished fell 0.47%. Meanwhile, in the U.K. the FTSE 100 finished down 0.59%.

On Tuesday, the U.S. is to release private-sector data on housing prices as well as a closely-watched report on consumer confidence.