NEW YORK (TheStreet) -- U.S. stock indices closed lower on Monday as investors took a breather after another record run-up in stocks last week that saw the Dow Jones Industrial Average I:DJI hit fresh records. 

The Dow Jones Industrial Average closed down 0.62% to 17,172.68. The S&P 500I:GSPC fell 0.8% to 1,994.29. The NasdaqI:IXIC  finished lower by 1.14% to 4,527.69. The Nasdaq's pronounced decline was driven by a 0.76% dip in the S&P 500 Information Technology sector as Yahoo! (YHOO) fell 5.57% after two research firms downgraded the stock following Friday's initial public offering of China's Alibaba (BABA) - Get Report . Tech heavyweight Microsoft (MSFT) - Get Report  settled down 0.97% after it delayed the launch of its Xbox One game console in China.

Though the broad benchmark S&P 500I:GSPC is up by the high single digits, up nearly 8% for the year, strategists say U.S. equities still have more room to run.

Watch the video below for a closer look at how U.S. markets ended the trading day Monday:

WATCH: More market update videos on TheStreet TV

Schaeffer's Investment Research's senior equity analyst Joe Bell for one doesn't believe the lackluster action on Monday points to evidence of a market top. "We saw a strong rally entering September and all of August. Volatility charts show investors are high on optimism," said Bell. "There's just a healthy bit of skepticism in the market and any pullbacks will be short because people are going to be hedged."

Banyan Partners' chief market strategist Robert Pavlik said although the S&P 500 is up about 8% year to date, the market hasn't yet reached a top. Investors have seen relief in the short term from uncertainties such as September's tradition of soft trading patterns and anticipations of changes in Fed policy, he said.

Although some worries about an early rate hike are creeping back in and impacting certain sectors such as utilities, consumer staples and telecoms, Pavlik said in the long run a higher interest rate environment will be good for the economy as it would encourage banks to lend more and spur consumer action.

"For the remainder of 2014 I'm still optimistic and I continue to position my client's portfolios with a focus on growth that will arrive as the U.S. returns to a more normalized interest rate environment," said Pavlik.

Stocks dipped slightly Monday after Chinese Finance Minister Lou Jiwei reportedly said his government has no plans to change its current policy just because recent data has been weak. Also, ECB President Mario Draghi warned of the slowing eurozone recovery as the recent economic data has been disappointing.

Germany's Merck said it will acquire Sigma-Aldrich (SIAL) for $17 billion in cash. Merck said the combined companies will be able to serve life science customers in a supply chain that can support the delivery of more than 300,000 products to life science customers around the world. Sigma-Aldrich shares surged 33.24%.

Siemens (SI) reached an agreement to buy Dresser-Rand (DRC) , the oilfield equipment maker, for $7.6 billion. Dresser-Rand gained 2.58%.

Auxilium Pharmaceuticals (AUXL) said Endo International's (ENDP) - Get Report $2.2 billion bid "significantly undervalues" Auxilium and is not a superior proposal under the terms of its existing merger agreement with QLT Inc. Auxilium closed up 0.13%.

TTM Technologies (TTMI) - Get Report acquired Viasystems (VIAS)  for $16.46 a share in cash and stock. Viasystems gained 35.04% and TTM Technologies fell 4.26%.

The United States Oil Fund (USO) - Get Report   finished down 0.38%.

-- By Andrea Tse and Kurumi Fukushima in New York

Follow @AndreaTTse

Follow @TheStreet_Rumi