NEW YORK - US STOCKS fell in cautious trading on Monday as the market awaited firm signals about economic recovery from prolonged recession.

The Dow Jones Industrial Average slumped 80.64 points (0.94 per cent) to 8,459.09 in bearish opening trades, after the blue-chip index ended nearly three per cent lower last week.

The tech-dominant Nasdaq dropped 22.39 points (1.23 per cent) to 1,805.08 while the broad-market Standard & Poor's 500 index shed 11.84 points (1.29 per cent) to 909.39.

After stocks posted their first weekly decline in five weeks, investors returned to the market on Monday nervous ahead of a two-day Federal Reserve policy meeting beginning Tuesday.

Investors also had their eyes on the upcoming round of quarterly earnings reports and financial and other reforms prospects.

'The lack of conviction right now is rooted in a wait-and-see mentality,' said Mr Patrick O'Hare of Briefing.com.

'Participants are awaiting further data that confirms signs of economic recovery are more than temporary. Participants are awaiting further decrees from the Fed as to how it will handle monetary affairs. Participants are awaiting second-quarter earnings reports. Participants are awaiting legislation on regulatory reform for the financial sector and reform proposals for the health care sector,' he explained.

The Federal Reserve's comments after talks this week are likely to offer clues on the timing and strength of an economic recovery.

Mr Gregory Drahuschak at Janney Montgomery Scott said the market would scrutinize the statement Wednesday from the Federal Open Market Committee.

'Rates are not likely to be changed but we suspect there could be some language in the policy statement suggesting that the Fed is contemplating pulling back on some of its stimulus,' he said. -- AFP