By Anora Mahmudova and Barbara Kollmeyer, MarketWatch

Apple Inc. first-quarter earnings in focus

U.S. stocks closed slightly lower Monday, with the S&P 500 and Nasdaq Composite retreating from record levels set on Friday.

Investors consolidated last week's solid gains and turned slightly cautious ahead of the Federal Reserve policy meeting, which begins on Tuesday.

The S&P 500 (SPX) closed 8.76 points, or 0.4%, lower to 2,108.93, with seven of 10 main sectors posting losses. Healthcare stocks sold off, with the S&P 500 subindex falling 1.8%. The Nasdaq Composite (RIXF) ended the session 31.84 points, or 0.6%, lower at 5,060.25, with biotechnology stocks leading the losses. The iShares Nasdaq Biotechnology ETF (IBB) plunged 4.2%. The Dow Jones Industrial Average (DJI) closed down 42.17 points, or 0.2%, to 18,037.97.

Kate Warne, investment strategist at Edward Jones, said investors are relieved that earnings aren't as bad as feared. But she noted that the market is cautious ahead of the Fed meeting this week.

"The stock market performance this earnings season is all about numbers beating lowered expectations. There is also less worry about Greece, while a combination of better economic news and ECB's quantitative easing are underpinning prices," Warne said.

Apple Inc. (AAPL) posted a staggering 33% rise in earnings, and raised its dividend which is expected to report after the opening bell. Shares in the tech juggernaut rallied 2.16% in after-hours trade.

Live blog: Apple second-quarter earnings expected to top targets (http://blogs.marketwatch.com/thetell/2015/04/27/live-blog-apple-second-quarter-earnings-expected-to-top-expectations/)

Strategist: Here's why tech stocks deserve to be loved (http://www.marketwatch.com/story/strategist-heres-why-tech-stocks-deserve-to-be-loved-2015-04-24)

Analysts expect Apple to report fiscal second-quarter earnings of $2.15 a share and revenue of $55.75 billion. Analysts have grown increasingly bullish on Apple, with momentum building surrounding its Apple Watch and better-than-expected sales of its iPhone 6 models. Read: What to watch for in Apple's earnings (http://www.marketwatch.com/story/what-to-watch-for-in-apples-earnings-2015-04-23)

Also read: Apple, energy, health care earnings to dominate week (http://www.marketwatch.com/story/apple-energy-health-care-earnings-to-dominate-week-2015-04-26)

A Fed meeting and data: The economic calendar heats up midweek, with a preliminary reading on first-quarter gross domestic product due on Wednesday. Also on Wednesday, Federal Reserve policy makers will deliver an updated policy statement after the conclusion of the central bank's two-day meeting.

Signe Roed-Frederiksen, senior analyst at Danske Bank, said the Federal Reserve could draw attention away from a soft patch in U.S. growth that many believe has been caused by temporary factors.

"Market participants have adjusted their expectations of a first fed funds rate hike from October December/January, and we believe that the statement could reverse some of this move," said Roed-Frederiksen. The analyst added that this week's data "should also work in the direction of an upward shift in the expected path for the fed funds rate."

Read: Will the economy roar back after a rocky start to the year? (http://www.marketwatch.com/story/will-economy-roar-back-after-rocky-start-to-the-year-2015-04-26)

Stocks to watch: Shares of Applied Materials Inc.(AMAT) dropped 8.4% after the company decided to abandon its merger plan with Tokyo Electron Ltd., citing problems with the U.S. Department of Justice.

Freeport-McMoRan Inc.(FCX) rose 4.8% and was the biggest gainer in the S&P 500, extending gains for a second day after reporting quarterly results last week.

U.S.-listed shares of Deutsche Bank AG(DB) were down 4% after Germany's biggest bank reported over the weekend that its profit halved on litigation costs (http://www.marketwatch.com/story/deutsche-bank-profit-halves-on-litigation-costs-2015-04-27) and said Monday it will scale back its investment banking (http://www.marketwatch.com/story/deutsche-bank-to-trim-its-investment-banking-2015-04-27).

Shares of Celladon Corp.(CLDN) slid 79% to $2.92 after the biotech company said over the weekend that a trial of its heart failure treatment missed its primary and secondary endpoints. Shares are set to open at the lowest level since the company went public in January 2014.

Other markets:European stocks (http://www.marketwatch.com/storyno-meta-for-guid) ended higher despite continuing debt troubles out of Greece.

Read: Some Europe ministers suggest 'Plan B' if Greece talks fail (http://www.marketwatch.com/story/some-europe-ministers-suggest-plan-b-if-greece-talks-fail-2015-04-27)

The Hong Kong Hang Seng Index and Shanghai Composite Index stocks both rallied on Monday, hitting new seven-year highs separately, led by oil and shipping stocks that surged on reports about possible mergers between several of China's largest state-owned firms.

Oil prices (http://www.marketwatch.com/story/oil-futures-edge-lower-as-dollar-creeps-higher-2015-04-27)(CLM5) settled lower, and gold (GCM5) jumped 2% to reclaim the $1,200 an ounce level. The dollar (DXY) traded slightly lower against most of its G-10 rivals.

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