US equity indexes fell in midday trading on Monday amid gains in government bond yields and the dollar as investors keenly await monetary policy projections from an interest rate-setting meeting mid-week.

The Dow Jones Industrial Average declined 0.5% to 47,734.8, with the Nasdaq Composite down 0.3% to 23,510.5, and the S&P 500 was 0.4% lower at 6,840.3.

The current probability of the Federal Open Market Committee announcing a 25-basis-point reduction in interest rates on Wednesday is almost 90%, up from more than 86% on Friday, according to the CME FedWatch tool. Ahead of the statement, including the updated Summary of Economic Projections, there are strong expectations of another one-to-two cuts of the same magnitude by March.

However, investors are concerned that the Fed could be cautious about the rate outlook, according to a report from The Wall Street Journal. "Powell will have no justification to talk about future rate cuts as all the information becomes new," with delayed economic data still to come, the news report said, citing Andy Brenner of NatAlliance Securities.

Nonfarm payroll reports for October and November are due on Dec. 16, and the Consumer Price Index will also be updated on the same day, after the Fed policy decision, according to a Friday note from Scotiabank.

US Treasury yields traded higher, with the two-year yield up 3.2 basis points to 3.6%. The 10-year yield advanced 3.9 basis points to 4.18%, the highest since mid-November.

The ICE US Dollar Index, which reflects the greenback's performance against a basket of the world's major currencies, appreciated 0.2% to 99.14.

Gold futures fell 0.5% to $4,222.74, and silver futures slumped 1.1% to $58.43.

Except for technology, all the other sectors retreated after midday. Communication services, consumer discretionary, and materials led the decliners.

IBM (IBM) agreed to acquire data streaming platform Confluent (CFLT) in a deal worth $11 billion as the technology giant seeks to boost its artificial intelligence offerings. Artificial intelligence industry mergers and acquisition deals are driving optimism in technology, with investors targeting companies with foundational AI capabilities. Shares of Confluent soared 29%.

Paramount Skydance (PSKY) surged 9.9%, the top gainer on the S&P 500, after the company kicked off an all-cash tender offer to acquire Warner Bros. Discovery (WBD) for $30 a share. The bid values Warner Bros. $108.4 billion and reflects an $18 billion cash premium compared with the Netflix (NFLX) offer terms, according to Paramount. Shares of Warner Bros. advanced 4%, the leader on Nasdaq.

President Donald Trump raised potential antitrust concerns around the Netflix deal on Sunday. Shares of Netflix dropped 4.4%, among the worst performers on the S&P 500.

In energy markets, West Texas Intermediate crude oil futures sank 1.6% to $59.11 a barrel.