Stocks added to their losses in choppy trading Monday, after the head head of the Eurogroup said the Cyprus rescue represented a new template for resolving euro zone banking problems and that other countries may have to restructure their banks.
Major averages opened higher as Wall Street initially cheered the last-minute bailout deal in Cyprus, pushing the S&P 500 within a point of touching its all-time closing high.
The Dow Jones Industrial Average turned lower, dragged by Caterpillar and Bank of America, shortly after hitting a fresh intraday high for the ninth time this month. The blue-chip index still remains on track for its best first-quarter percentage gain since 1998.
The S&P 500 and the Nasdaq also erased their early gains. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, gained above 13.
Most key S&P sectors dipped into negative territory, led by industrials and materials.
Last week, major averages finished in the red for the week, with the Dow snapping a four-week win streak and the S&P 500 logging its second losing week this year.
(Read More: Where's the Long Awaited Market Correction?)
"If there is a risk in a bank, our first question should be 'Okay, what are you in the bank going to do about that? What can you do to recapitalize yourself?'. If the bank can't do it, then we'll talk to the shareholders and the bondholders, we'll ask them to contribute in recapitalizing the bank, and if necessary the uninsured deposit holders," said Dutch Finance Minister Jeroen Dijsselbloem, who heads the Eurogroup of euro zone finance ministers, hours after the Cyprus deal was struck.
The euro fell below $1.29 against the U.S. dollar.
Cyprus and its international lenders reached a deal merely hours before a deadline to resolve the island nation's financial crisis and avert the country's exit from the euro zone. The 10 billion euro ($13 billion) deal involves the winding down of Cyprus' second largest lender, the Popular Bank of Cyprus, and imposes a levy on uninsured deposits over 100,000 euros ($130,000) in Cypriot banks.
(Read More: Cyprus Relief: Why the Rally May Be Short Lived)
"Despite a deal being struck for Cyprus, it will set an unsettling precedent for future bailouts and investors will once again be concerned over the security of their bank deposits," wrote Mike McCudden, head of derivatives at stockbroker Interactive Investor. "Furthermore, investors should question why the regulators allowed the Cypriot banking system to rise to this size, given the experiences in Iceland and Ireland."
"Washington's out for two weeks, it's a holiday-shortened trading week and it's also the end of the month," noted Brian Battle, vice president of trading at Performance Trust Capital Partners.
Among earnings, Dollar General rose after the discount retailer posted earnings that beat expectations and said this year's sales growth could top the strength it saw in 2012.
Apollo Group surged to lead the S&P 500 gainers after the for-profit education company posted a better-than-expected profit and reaffirmed its full-year forecast.
Elsewhere, shares of Dell jumped after the company confirmed it had received competing offers from Blackstone Group and billionaire investors Carl Icahn as the computer giant looks to go private. The offers come as the company agreed to a $24.4 billion deal to be taken private by private equity firm Silver Lake.
Facebook dipped, falling to its lowest level this year, after U.S regulators approved a plan to compensate market makers who lost money in the social-media giant's IPO on the Nasdaq last May.
Apple traded higher after the tech giant acquired WiFiSlam, a startup company that makes mapping applications for smartphones.
Also among techs, BlackBerry extended sharp losses from last week after the smartphone maker's new BlackBerry Z10 launch failed to generate buzz. In addition, Goldman Sachs cut its rating on the company to "neutral" from "buy."
Vodafone rallied amid a U.K.'s Sunday Times report that said telecommunications company was looking to sell its 45 percent stake in its U.S. Verizon Wireless unit.
On Sunday, Reuters reported the International Monetary Fund is planning to cut its 2013 U.S. growth forecast from 2 percent to 1.7 percent, due to higher taxes and spending cuts, citing a draft of the IMF's next World Economic Outlook report seen by Italian news agency ANSA.
Federal Reserve Chief Ben Bernanke and the International Monetary Fund's Olivier Blanchard are expected to speak at the London School of Economics later this afternoon.
In addition, New York Federal President Bill Dudley is scheduled to speak at the Economic Club of New York at 12:30 pm ET.
?By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
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