A Wall Street sign is pictured outside the New York Stock Exchange amid the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, U.S., April 16, 2021.
A Wall Street sign is pictured outside the New York Stock Exchange amid the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, U.S., April 16, 2021. Reuters / Carlo Allegri

Wall Street ended lower after a choppy session on Monday, with declines in Exxon Mobil and other energy companies weighing against gains in Boeing as investors digested the U.S. stock market's biggest monthly gains in two years.

Stocks gave up some of a strong rally from last week that was driven by bets the Federal Reserve may not need to be as aggressive with interest rate hikes as some had feared.

Also helped by stronger-than-expected second-quarter results, the S&P 500 and the Nasdaq in July posted their biggest monthly percentage gains since 2020.

The S&P 500 bounced between gains and declines on Monday as some investors became more cautious in the wake of that recent rally.

The Federal Reserve says it aims to tame inflation and cool down demand with the interest rate hikes, but some investors and analysts worry that its aggressive moves could drive up unemployment and cripple the economy.

"There are still a lot of questions about whether we are really out of the woods economically, and we probably aren't," said Tom Martin, senior portfolio manager at GLOBALT Investments in Atlanta. "We're not even close on the (economic) effects of the Fed raising interest rates."

U.S. manufacturing activity slowed-less-than-expected in July, with signs that supply constraints are easing, a report showed.

That data came on the heels of surveys indicating factories across Asia and Europe struggled for momentum in July as flagging global demand and China's strict COVID-19 curbs slowed production.

Oil prices fell on demand concerns, which in turn weighed on the energy sector. The S&P 500 energy index tumbled and was the deepest decliner among 11 sectors. [O/R]

Exxon Mobil slid 2.5% and was among the stocks contributing the most to the S&P 500's decline.

A monthly U.S. jobs report on Friday will be parsed for clues about the Fed's next moves in its fight against decades-high inflation.

The U.S. central bank has raised interest rates by 2.25 percentage points so far this year and has vowed to be data-driven in its approach toward future hikes.

Boeing Co gained 6.1% after Reuters reported the U.S. aviation regulator approved the planemaker's inspection and modification plan to resume deliveries of 787 Dreamliners.

The S&P 500 is down about 14% in 2022. However, recent quarterly reports have shown companies' profits were far more resilient than estimated. Of 283 S&P 500 companies that have reported results, 78% have topped profit estimates, as per Refinitiv data. The long-term average is 66%.

The S&P 500 declined 0.28% to end the session at 4,118.59 points.

The Nasdaq declined 0.18% to 12,368.98 points, while Dow Jones Industrial Average declined 0.14% to 32,798.60 points.

U.S. House of Representatives Speaker Nancy Pelosi was set to visit Taiwan on Tuesday. China warned that its military would never "sit idly by" if she visited the self-ruled island claimed by Beijing.

PerkinElmer Inc jumped after the medical diagnostic firm said it will sell some of its businesses along with the brand name to private equity firm New Mountain Capital for up to $2.45 billion in cash.

Across the U.S. stock market, declining stocks outnumbered rising ones by a 1.1-to-one ratio.

The S&P 500 posted 5 new highs and 31 new lows; the Nasdaq recorded 68 new highs and 98 new lows.

Volume on U.S. exchanges was relatively light, with 10.3 billion shares traded, compared to an average of 10.8 billion shares over the previous 20 sessions.