US stocks drop as market eyes Fed

US stocks finished lower Monday as traders looked ahead to a Federal Reserve meeting later this week that could result in the first interest rate hike in over nine years.

The Dow Jones Industrial Average dropped 62.13 points (0.38 percent) to 16,370.96.

The broad-based S&P 500 fell 8.02 (0.41 percent) to 1,953.03, while the tech-rich Nasdaq Composite Index slid 16.58 (0.34 percent) to 4,805.76.

"There's just a lot of nervous anticipation with regards to what the Fed is going to do on Thursday," said Bill Lynch, director of investment at Hinsdale Associates.

Although the Fed has signaled its plans to lift benchmark interest rates in 2015, some commentators say turbulence in global financial markets could prompt the US central bank to push back its time frame.

Technology stocks with larger declines included Dow member Microsoft (-1.0 percent), Amazon (-1.5 percent) and Netflix (-1.9 percent).  

Apple rose 1.0 percent after it said pre-orders of its new iPhone 6S models were on track to best last year's record for new handsets. The tech giant unveiled the new smartphones at a product launch last week.

Chinese e-commerce giant Alibaba tumbled 3.1 percent following an article in the weekly financial newspaper Barron's that warned shares could fall 50 percent further. Yahoo, which holds a stake in the Chinese company, lost 3.5 percent.

Solera Holdings, which provides software for the automotive and insurance industries, surged 8.5 percent on news it will be acquired by private-equity firm Vista Equity Partners for $6.5 billion.

Biopharmaceutical company Baxalta rose 4.3 percent following a Wall Street Journal report that Shire may sweeten its unsolicited bid for Baxalta. Baxalta rejected Shire's prior bid.

Bond prices were mixed. The yield on the 10-year US Treasury slipped to 2.18 percent from 2.19 percent Friday, while the 30-year held steady at 2.95 percent. Bond prices and yields move inversely.