US stocks lost ground on Monday, with the major indexes closing out a strong month of gains on a weaker foot, as investor focus turned to the Federal Reserve's policy meeting this week.

The central bank is widely expected to raise interest rates by 75 basis points on Wednesday at the conclusion of its two-day policy meeting, but investors will look for any signals the Fed may be considering a deceleration in interest rate hikes in the future.

Hopes the Fed may pull back from its aggressive interest rate hike policy have lifted equities in recent weeks, with the S&P 500 notching a gain of nearly 9 percent over the past two weeks. The Dow booked its biggest monthly percentage gain in decades and biggest October percentage gain since at least 1900.

Comments from Fed officials after the policy decision as well as labour market data later this week will help shape market expectations for future hikes starting at the December meeting.

"It is pretty much a foregone conclusion, it has been almost a 100 percent probability for at least three weeks now that it would be three-quarters of a point and very little chance that it is going to be more or less than that, but there is always apprehension on the part of everyone just waiting for that to be done," said Randy Frederick, managing director, trading and derivatives, Charles Schwab in Austin.

"People are going to be digesting what is said on Wednesday about what happens on December 14. My hope is that would be a quarter point. In reality, it is probably going to be half a point, but even that would be a very positive sign for the market."

The S&P 500 closed down 0.7 percent at 3,871, while the Nasdaq Composite lost 1.0 percent to 10,988. The Dow Jones Industrial Average fell 0.4 percent to 32,732.

Apple lost ground after a Reuters report said production of its iPhones could slump by as much as 30 percent next month due to tightening Covid curbs in China.

Megacap growth names such as Amazon and Google-owner Alphabet which have been under pressure in the rising rate environment, were also lower.

Nearly all 11 S&P 500 sectors fell, with technology and communication services the worst performers with declines of more than 1 percent. Energy gained ahead of remarks on oil companies by US President Joe Biden later on Monday.

Energy companies such as Chevron and Exxon Mobil have blown past profit estimates this quarter, benefiting from surging energy prices, in contrast to Big Tech firms that have largely disappointed investors.

"Dividend stocks, energy, stuff that is short duration, industrials ... that is what is working," said Eric Diton, president and managing director at The Wealth Alliance in Boca Raton, Florida. (Reuters)