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NEW YORK (CNNMoney.com) -- Stocks finished near session lows Monday following a midday sell-off, with the Dow and Nasdaq indexes posting their largest one-day losses in nearly a month, as investors remain cautious ahead of corporate earnings season and key employment data due later in the week.
The Dow Jones industrial average (INDU) tumbled 78 points, or 0.7%, with components Intel (INTC, Fortune 500), Alcoa (AA, Fortune 500), American Express (AXP, Fortune 500) and Microsoft (MSFT, Fortune 500) sinking the most.
The S&P 500 (SPX) lost 9 points, or 0.8%. The Nasdaq (COMP) dropped 26 points, or 1.1%, with a Microsoft downgrade dragging the tech-heavy index lower. Other big tech shares losing ground included Apple (AAPL, Fortune 500) and Google (GOOG, Fortune 500).
Stocks started the day near the breakeven point, but selling accelerated as the session wore on. With little on the economic docket to attract investors, the September rally has lost its momentum.
"We're just seeing a pullback from that," said Peter Cardillo, chief market economist at Avalon Partners. "We're going to get the monthly jobs report later this week, so volume will be light and the market could be volatile ahead of that release."
A report showing a continued slowdown in manufacturing, coupled with data showing some pickup in the housing market, did little to stem the jitters on Monday.
"We'll continue to see a lot of mixed signals," said Karl Mills, president and chief investment officer at Jurika Mills and Keifer. "I think it will be hard for the market to repeat as strong of a month as what we just saw, but it'll depend on the companies' earnings and their outlooks."
Alcoa kicks off the unofficial start of earnings season after the closing bell on Thursday. Investors will also be gearing up for the government's monthly jobs report, due out Friday.
Stocks had started October on a positive note -- although Friday's advance was limited. But with economic uncertainty continuing to underpin the markets, investors could be in for a rough month.
Economy: A report from the Commerce Department showed that factory orders fell 0.5% in August, heightening fears about a slowdown in U.S. manufacturing growth. Economists were expecting order to decrease by 0.4%.
The National Association of Realtors said pending home sales rose 4.3% in August. Economists were expecting the report to show a mere 1% uptick in sales. But pending home sales only indicate contracts being signed and not actual closed purchases.
Companies: Shares of American Express tumbled 6.5%, after the Department of Justice filed an antitrust lawsuit against the company. The credit card giant said it has "no intention of settling the case."
The suit comes as rivals Visa (V, Fortune 500) and Mastercard (MA, Fortune 500) settled their antitrust case regarding their credit card policies. Neither company admitted any wrongdoing.
French pharmaceutical giant Sanofi-Aventis (SNY) launched a hostile takeover of Genzyme (GENZ, Fortune 500). Sanofi said it was taking its $18.5 billion offer for its rival directly to shareholders, after its efforts to work with the board of Genzyme were "blocked at every turn." Shares of Sanofi fell 0.8%, while Genzyme's stock rose 0.2%.
Shares of Sara Lee (SLE, Fortune 500) climbed 7.2%, after the New York Post reported that the company turned down a $12 billion buyout offer from investment firm KKR & Co.
Microsoft (MSFT, Fortune 500) fell 1.9%, after the tech giant's shares were cut by a Goldman Sachs analyst.
World markets: European stocks declined Monday. The CAC 40 in France and Germany's DAX closed down at 1.2%. Britain's FTSE 100 fell 0.7%
In Asia, the Hang Seng gained nearly 1.2%. Japan's Nikkei finished the session down 0.3%. The Bank of Japan started a two-day policy meeting. The Shanghai Composite was closed for Golden Week.
Currencies and commodities: The dollar rose against the euro and the Japanese yen, but fell slightly against the British pound.
Gold futures for December delivery fell $1 to settle at $1,316.80 an ounce.
The price of crude oil for November delivery fell 11 cents to settle at $81.47 per barrel.
Bonds: Prices for U.S. Treasurys rose, pushing the yield on the 10-year note down to 2.48% from 2.51% late Friday. Bond prices and yields move in opposite directions. The 2-year yield touched a record low just below 0.40% 
| Overnight Avg Rate | Latest | Change | Last Week |
|---|---|---|---|
| 30 yr fixed | 3.80% | 3.80% | |
| 15 yr fixed | 3.09% | 3.11% | |
| 5/1 ARM | 2.65% | 2.69% | |
| 30 yr refi | 3.77% | 3.86% | |
| 15 yr refi | 3.09% | 3.21% |
Today's featured rates:
| Index | Last | Change | % Change |
|---|---|---|---|
| Dow | 12,454.83 | -74.92 | -0.60% |
| Nasdaq | 2,837.53 | -1.85 | -0.07% |
| S&P 500 | 1,317.82 | -2.86 | -0.22% |
| Treasuries | 1.74 | -0.01 | -0.80% |
| Company | Price | Change | % Change |
|---|---|---|---|
| Bank of America Corp... | 7.15 | 0.01 | 0.14% |
| Sprint Nextel Corp | 2.62 | 0.09 | 3.56% |
| Cisco Systems Inc | 16.33 | -0.06 | -0.37% |
| Chesapeake Energy Co... | 15.81 | 0.23 | 1.48% |
| Ford Motor Co | 10.60 | 0.01 | 0.09% |
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