Stocks fall on terrorism fears, Fed uncertainty, possible UK 'Brexit'

Stocks fell Monday after the deadliest mass shooting in the country's history in Orlando over the weekend unsettled Americans and raised fears about domestic terrorism.

Wall Street followed global markets lower as stocks in Asia and Europe tumbled amid uncertainty ahead of the U.S. Federal Reserve's meeting this week and on mounting concern about Britain’s possible exit from the European Union.

The Dow Jones industrial average was down 133 points, or 0.7%, to close at 17,732 as shares of Dow component Microsoft (MSFT) tumbled 2.6% on news it will pay $26.2 billion to buy LinkedIn (LNKD). Shares of the social networking site soared 47% as the $196-a-share offer represents a nearly 50% premium over its Friday closing price of $131.08.

Microsoft to acquire LinkedIn for $26 billion

The Standard & Poor's 500 index fell 0.8% and the tech-heavy Nasdaq composite lost 0.9%.

The Fed begins a two-day meeting Tuesday and it is widely expected that the central bank will hold off on raising interest rates. Still, investors will be anxious to hear how policymakers view the state of the U.S. economy and the hints about what the central bank might do with rate hikes at future meetings.

Also, investors will be watching the Bank of Japan to see if it makes any moves following its meeting this week.

Fed may signal slower hikes, stay mum on July

"This week, markets will again be in wait-and-see mode as traders await the results of policy events (the Federal Reserve and Bank of Japan meetings) and the so-called Brexit vote next week," Gina Martin Adams, equity strategist at Wells Fargo Securities, wrote in a report.

The S&P 500 flirted with setting a new high last week but on Thursday closed about 15.34 points short. After dropping 19 points on Friday, the market benchmark entered the week 1.6% below its record close of 2130.82 in May 2015. At Monday's close it was 2.4% below that high.

However, John Stoltzfus at Oppenheimer isn't worried about the pullback. “Stocks reversed direction on growth fears in the last two days of last week in a move that we think overstates the negatives and ignores improving fundamentals,” he says.

U.S. interest rates continued to follow global yields lower. The 10-year Treasury note yield ended at 1.61% Monday, which was the lowest close since December of 2012.

Overseas Monday, Japan’s Nikkei 225 index plunged 3.5% to 16,019.18, while Hong Kong’s Hang Seng index slid 2.5% to 20,512.99. The Shanghai composite index tumbled  3.2% to 2833.07.

European stocks were also lower Monday as speculation rises over whether Britons will vote to remain in the European Union in a referendum on June 23. The broad Stoxx Europe 600 was down 1.8%. Germany's DAX index dropped 1.8% and France's CAC 40 fell 1.9%. Britain's FTSE 100 was down 1.2%.

Markets are getting increasingly nervous about the prospect of Britain voters opting to leave the European Union, an event that Wall Street pros say could undermine investor confidence, cause market volatility and cause investors to take a risk-off stance.