Stocks fell on Monday as the corporate outlook was clouded ahead of earnings and uncertainty continued to creep from abroad, while volume hit its lowest level of the year.

A warning from hotel operator Marriott that hurt hotel and other consumer shares during the regular session was followed after the bell by oilfield services company Halliburton Co's announcement that first-quarter earnings could be trimmed.

A good quarter is baked in right now, but I think there are going to be a lot of surprises, the latest one from Halliburton, said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

He said among the main issues facing the next quarter's earnings are geopolitical issues emanating from northern Africa and the Middle East, the aftermath of Japan's natural disasters and nuclear crisis, and rising input costs.

If companies can't pass along the price increases, we're going to see some problems and that's where earnings are going to start to have an issue, Saluzzi said. Unless they pass it on and then we have inflation ... so pick your poison.

Marriott International shares fell 6.3 percent to $35.30 during the regular session, while Halliburton dropped 1.9 percent to $47 after the bell.

Stocks spent most of the day in positive territory, with the S&P 500 hitting a session high near 1,320 for a second straight session, driven by strength in the telecommunications sector and consumer spending data.

The Dow Jones industrial average <.DJI> lost 22.71 points, or 0.19 percent, to 12,197.88. The Standard & Poor's 500 Index <.SPX> fell 3.61 points, or 0.27 percent, to 1,310.19. The Nasdaq Composite Index <.IXIC> fell 12.38 points, or 0.45 percent, to 2,730.68.

Analysts at Instinet in New York said a battle over the territory just beyond the day's highs on the S&P 500 was likely to continue in the upcoming sessions.

Over the very near term ... the odds point toward another short-term firefight in the 1,320-1,330 area, Instinet's note said.

The S&P telecom index <.GSPL> rose 1.4 percent after a brokerage upgraded a number of companies, including Dow components AT&T Inc and Verizon Communications Inc .

AT&T rose 1.8 percent to $29.36 and Verizon gained 1.2 percent to $37.75, curbing losses in the blue-chip index.

About 5.9 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq -- the lowest volume in 2011. Last Tuesday's 6.54 billion was the lowest until Monday.

From the point of view of a purchaser, to make a commitment here, you have to think margins will keep expanding and the Fed will stay easing, said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto.

He said light volumes reflect investors' uncertainty on those issues.

U.S. consumer spending rose slightly more than forecast in February, while inflation accelerated at its fastest pace since June 2009.

Eastman Kodak Co , up 5.3 percent at $3.58, was the NYSE's third-most active stock after a U.S. trade panel agreed last week to review a case that could bring the struggling photography company hundreds of millions of dollars in royalties.

EBay Inc plans to buy e-commerce service provider GSI Commerce for nearly $2 billion to build up its online marketplaces as it ramps up its battle with Amazon.com Inc .

GSI shares surged 50.7 percent to $29.20 in Nasdaq trading while eBay shares lost 4.3 percent to $30.34 and Amazon slid nearly 1 percent to $169.35.

On Wall Street's worry front: Highly radioactive water has leaked from a reactor at Japan's crippled nuclear complex, the plant's operator said, while environmental group Greenpeace said it had detected high levels of radiation outside an exclusion zone, adding to mounting problems in Japan's battle to contain the world's worst atomic crisis since Chernobyl.

Declining stocks outnumbered advancing ones on the NYSE by 1,765 to 1,214, while on the Nasdaq, about three stocks fell for every two that rose.

(Reporting by Rodrigo Campos; Editing by Jan Paschal)