The Dow dipped a tenth of a percent, the S&P 500 shed half a percent and the Nasdaq lost more than eight-tenths.

Traders widely expect the central bank to keep rates unchanged at its meeting next week, as does Kevin Mahn, President and Chief Investment Officer at Hennion & Walsh Asset Management, who believes one more rate hike is enough to push the economy into a recession.

"If they stop here, keep rates where they are for the first two quarters of next year, navigate through this expected economic slowdown, and then start to cut interest rates towards the second half of the year, not only could they actually navigate a soft landing, but that could lead to an ultimate economic recovery and good returns for both stock and bond markets over the next three years when interest rates are forecasted to come down by nearly 3% by the Federal Reserve's own projections."

In company news, shares of Alaska Air tumbled 14% after the carrier said on Sunday it would acquire the parent company of peer Hawaiian Airlines for $1.9 billion, including debt. Shares of Hawaiian Holdings nearly tripled in value.

Shares of cryptocurrency firms such as Coinbase Global, Riot Platforms and Marathon Digital rallied between 5% and 9% after bitcoin crossed $42,000 for the first time since early 2022.

Megacaps Microsoft, Apple, Nvidia and Amazon all lost ground.

But shares of ride-hailing service Uber Technologies rose more than 2% after an announcement on Friday it will join the S&P 500 effective Dec. 18th.