But a rise in tobacco stocks blunted losses among blue chips, following an Indiana jury ruling late Friday, which was in the industry's favor on a smoking liability lawsuit.
The Dow Jones industrial average fell 28.85 to 5,693.89.
Decliners led advancers by 1,360 to 989 on the New York Stock Exchange. NYSE volume totaled 281.41 million shares vs. 308.02 million on Friday.
Traders and analysts described a typical late-summer session, with many market players out on vacation and remaining investors groping for something upon which to hang their trades.
Among broader markets, the NYSE composite fell 1.34 to 355.89, and the S&P 500 slipped 3.15 to 663.88. The Nasdaq composite fell 4.20 to 1,138.85, and the Amex market value index dropped 0.32 to 560.62.
Weaker bonds provided a slight impetus to sell, after two fresh reports on real estate activity failed to quell last week's concerns that the economy may growing at too fast.
The yield on the 30-year benchmark Treasury bond was pushed to 6.99 percent, after the Commerce Department said that U.S. building permits rose an adjusted 3 percent in July, more than the expected rise of 2.6 percent.
And the National Association of Realtors said sales of existing single-family homes slipped in July to a 4.14 million seasonally adjusted annual rate. The data stoked bond investors' concerns that the economy could be growing fast enough to induce the Federal Reserve to raise interest rates.
Tobacco issues faring well included cigarette maker Philip Morris. Its shares gained $2.12-1/2 to close at $90.12-1/2 on the New York Stock Exchange. RJR Nabisco common shares also advanced, climbing $1 to $26.50 on the NYSE.