NEW YORK (TheStreet) -- Stocks closed modestly lower on Monday, caught in the crosshairs of worries over a looming Federal Reserve meeting on Tuesday and flailing Greek debt talks. 

The S&P 500 fell 0.45%, the Dow Jones Industrial Average dropped 0.59%, and the Nasdaq declined 0.42%.

Fed members will convene for their two-day meeting on Tuesday. An announcement will be released and a press conference held mid-afternoon Wednesday. Economists do not expect Fed members to elect to raise interest rates until September at the earliest. Click here for more.

"Activity is not yet strong enough to give the Fed 'reasonable confidence' that progress in the labor market will continue," said SG Global Economics' Michala Marcussen. "Therefore, we do not expect any signals regarding the timing of the lift-off in rates."

European markets closed sharply lower after negotiations between Greece and its European creditors broke down on Sunday, reportedly after only 45 minutes. Both sides are standing firm on proposed austerity measures with no agreement in sight that would allow Greece access to additional debt relief before its repayments to the International Monetary Fund come due June 30. Click here for more.

Greece has another chance to negotiate terms for further debt relief at a meeting of eurozone finance ministers on Thursday. Click here for more.

The Organization of the Petroleum Exporting Countries hit its highest monthly production volume since October 2012. The group responsible for one-third of global supply produced 31.11 million barrels per day in May, according to the latest Platts survey.

West Texas Intermediate crude closed 0.7% lower to $59.52 a barrel. Exxon Mobil (XOM) - Get Report, Chevron (CVX) - Get Report, ConocoPhillips (COP) - Get Report and Kinder Morgan (KMI) - Get Report were all lower, while the Energy Select Sector SPDR ETF (XLE) - Get Report dipped 0.2%.

"The crude complex continues to fall today as the sky-high production of OPEC and the U.S. shows no signs of slowing," said Schneider Electric commodity analyst Austin Sapp. "Traders seem to be losing hope that the strategy of OPEC is successfully stealing market share from competitors... Oversupply persists, pushing the crude complex down for now."

Health insurance company Cigna (CI) - Get Report rocketed more than 11% higher on reports it had rejected an offer from Anthem (ANTM) - Get Report. Anthem had reportedly offered Cigna $175 a share, according to Dow Jones.

Gains among homebuilders helped to minimize some market losses, led by Standard Pacific (SPF) and Ryland Group (RYL) on news of a merger with a combined market cap of $5.2 billion. Standard Pacific shareholders will hold a 59% stake while Ryland shareholders will hold the remainder. Click here for more.

"This industry is in bad need of rationalization," said TheStreet's Jim Cramer. "That said, I vastly prefer Lennar to either or both of these two companies and if you think that housing's really going to perk up go buy Wells Fargo (WFC) - Get Report, which is our biggest financial in"

Homebuilder confidence in the U.S. hit a nine-month high in June, according to the National Association of Home Builders' monthly Housing Market Index. The gauge gained 5 points to 59 in June, higher than an estimated reading of 55.

"June has historically been one of the most important months for housing starts on a non-seasonally adjusted basis. June's reading in the sentiment index bodes well for starts in 2015," Wells Fargo analysts wrote in a note. Housing starts data for May will be released on Tuesday morning.

U.S. industrial production fell 0.2% in May, below forecasts for an increase of 0.2%. The measure fell 0.5% in April.

"The tone of this report was quite disappointing, and when added to the weak Empire manufacturing sector print, the market is beginning to look warily to the other economic reports this week for some context in judging the disappointing manufacturing sector performance -- which appears to show no signs ending," said Millan Mulraine, deputy head of U.S. strategy at TD Securities.

The Empire State Manufacturing Survey, a gauge of activity in the New York region, declined to a reading of -2 in June, down from 3.09 in May. Economists had expected a reading of 5.9.