US stocks snap record-setting rally

US stocks snapped Monday a three-day rally to record highs as investors awaited Apple earnings results and a Federal Reserve policy meeting.

The Dow Jones Industrial Average dropped 42.17 points (0.23 percent) to 18,037.97.

The Standard & Poor's 500-stock index retreated 8.77 (0.41 percent) to 2,108.92, while the tech-rich Nasdaq Composite Index fell 31.84 (0.63 percent) to 5,060.25.

Both the S&P and Nasdaq had built on record closes Friday as markets opened higher, but Wall Street was unable to maintain the momentum.

Apple bounced up 1.8 percent ahead of its first earnings report as a member of the blue-chip Dow. The tech giant is to report fiscal second-quarter earnings after the markets close. Apple has beaten profit estimates for the past eight quarters, noted John Plassard of Mirabaud Securities.

Investors also awaited the outcome of a two-day meeting of the Federal Open Market Committee, the Fed's policy arm, on Wednesday for signs of the timing of an interest rate increase, expected this year.

Biotech shares slid after Mylan rejected Teva Pharmaceutical's $40.1 billion hostile takeover bid, saying the Israeli firm undervalued the company and the proposed combination "carries significant antitrust risk".

Mylan sank 5.7 percent and Teva dropped 4.3 percent. Amgen lost 3.4 percent, Biogen loset 3.1 percent and Gilead Sciences slipped 0.7 percent.

Applied Materials dived 8.4 percent after it agreed with Tokyo Electric to abandon their nearly $10 billion merger agreement, citing opposition from the US Justice Department on antitrust grounds.

The announcement came after Comcast and Time Warner Cable said Friday they had scrapped their $45 billion merger plans, also due to US anti-trust concerns.

Time Warner Cable gained 0.7 percent on speculation that it may be in the sights of Charter Communications; Charter slid 1.5 percent.

IGATE added 3.3 percent at $47.36 after French IT company Capgemini said it was buying the US rival for $4 billion in a cash-and-stock deal that offered $48 per share, a five percent premium to IGATE stock's close on Friday.

Tesla Motors jumped 6.0 percent. The electric-car maker is expected to make an announcement about storage batteries Thursday.

Bond prices were mixed. The yield on the 10-year US Treasury rose to 1.93 percent from 1.92 percent Friday, while the 30-year rose fell to 2.61 percent from 2.62 percent. Bond prices and yields move inversely.