NEW YORK — Three days before the end of the month, a blistering rally in stocks appears to be fading.
The stock market edged lower Monday as a big week for economic news got underway. A string of big-name merger deals wasn't enough to push indexes higher.
On Wednesday the government will report its first estimate of U.S. economic growth for the second quarter, and on Friday it will publish its monthly jobs survey.
Both reports will give investors a better idea about the strength of the economy and what's next for the Federal Reserve's stimulus program. Investors will hear from the Fed on Wednesday after the bank winds up a two-day policy meeting. The central bank's stimulus has been a major factor in supporting a four-year rally in stocks.
The Standard & Poor's 500 index dropped seven points, or 0.4 percent, to 1,684, as of 12:45 p.m. Eastern Daylight Time.
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Eight of the 10 sectors in the index fell. The declines were led by energy companies and banks.
The benchmark index is still up 4.9 percent in July, and with just three days left in the month, the S&P 500 is on track to have its best month since January. The index jumped this month, climbing to an all-time high July 22, after Fed Chairman Ben Bernanke assured investors that the Fed wouldn't cut its stimulus before the economy was ready.
Stocks may struggle to add to their gains given that expectations for the economy remain modest, said Scott Wren, a senior equity strategist at Wells Fargo Advisors.
"I don't think you're going to see the market sustain much higher levels than this," said Wren. "All this data is going to show that we are slowly improving, but it's a slow process and there's not much to get excited about."
The U.S. economy is forecast to have grown 0.5 percent in the second quarter, according to data provider FactSet.
A trio of corporate deals caught investors' attention Monday but failed to ignite the broader market.
Saks jumped after Canadian retailer Hudson's Bay, the parent company of Lord & Taylor, agreed to buy the luxury store operator for $2.4 billion, or $16 a share. Saks rose 54 cents, or 3.5 percent, to $15.84.
Omnicom Group jumped in early trading after agreeing to combine with France's Publicis Groupe to create the world's largest advertising company. Omnicom fell back by noon, gaining 32 cents, or 0.5 percent, to $65.43. Interpublic Group, another big advertising company, also rose 68 cents, or 4.3 percent, to $16.56.
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Drugmaker Perrigo fell $8.86, or 6.7 percent, to $125.2 after the drugmaker agreed to buy Ireland's Elan for $8.6 billion.
The deals should be positive for the stock market in the long run, said Dan Veru, chief investment officer at Palisade Capital Management. Companies are sitting on record cash balances and borrowing costs, though rising, are still close to record lows.
"Companies are struggling to grow organically," said Veru. "So, how do they grow? They grow by buying other businesses."
The Dow Jones industrial average fell 41 points, or 0.3 percent, to 15,517. The Nasdaq composite dropped 11 points, or 0.3 percent, to 3,601.
Investors will also be focusing on corporate earnings this week.
Just over half of the companies in the S&P 500 index have reported earnings for the second quarter. Analysts are currently forecasting earnings growth of 4 percent for the April-through-June period, according to S&P Capital IQ. That's the slowest rate of growth in three quarters.
In government bond trading, the yield on the 10-year Treasury note rose to 2.59 percent from 2.56 percent Friday. The note's yield, which moves inversely to its price, edged up 0.1 percentage point last week.
In commodities trading, crude oil rose 35 cents, or 0.3 percent, to $105.05 a barrel. Gold climbed $7.50, or 0.6 percent, to $1,328.90 an ounce.
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The dollar gained against the euro, but fell against the Japanese yen.
