U.S. stocks fell, erasing early gains, amid disappointing sales figures from General Motors and concern the Federal Reserve may signal this week that interest rates will rise more than forecast.

The Standard & Poor's 500-stock index climbed as much as 0.7 percent on enthusiasm surrounding the early transfer of authority in Iraq. The rally faded in the last two hours of trading.

"Investors are waiting for the Fed and waiting three, four days to make sure Iraq can stand on its feet a little bit," said Chris Tucker, head of stock trading at HSBC Securities USA.

The S&P 500 fell 1.08, or 0.1 percent, to 1133.35. The Dow Jones industrial average dropped 14.75, or 0.1 percent, to 10,357.09. The Nasdaq composite index declined 5.65, or 0.3 percent, to 2019.82.

General Motors dropped $1.14, to $46.51. The 2.4 percent loss was the steepest in the Dow average. U.S. sales this month at the world's largest automaker probably will decline from the same period last year, said Paul Ballew, the company's chief sales analyst. The industry-wide annual sales rate for June also will probably fall to 16.3 million, from 16.5 million in June 2003, Ballew said in an interview. Ford Motor, the second-largest U.S. automaker, fell 20 cents, to $15.65.

Policymakers meet Wednesday to decide whether to raise the Fed's benchmark interest rate to combat inflation. An economic report issued yesterday hinted at inflation. Personal spending rose 1 percent in May, the biggest increase since October 2001, as purchases of automobiles and other durable goods accelerated. In the same report, a measure of prices tied to spending gained 0.5 percent, the Commerce Department said, matching the biggest increase in 14 years.

Altria Group, owner of Philip Morris USA, the world's biggest cigarette maker, climbed $1.80, to $49.60. The 3.8 percent gain was the biggest in the Dow. A judge cleared the way for the tobacco industry to file a pretrial appeal aimed at blocking the U.S. government from pursuing a $280 billion fraud claim.

EBay, the largest Internet auctioneer, advanced $2.09, to $92.81.

Other Indicators

* The New York Stock Exchange composite index rose 0.38, to 6571.58; the American Stock Exchange index fell 2.22, to 1247.76; and the Russell 2000 index of smaller-company stocks fell 3.60, to 584.10.

* Declining issues outnumbered advancing ones by 6 to 5 on the NYSE, where trading volume fell to 1.35 billion shares, from 1.79 billion on Friday. On the Nasdaq Stock Market, decliners outnumbered advancers by 9 to 7 and volume totaled 1.59 billion, down from 2.15 billion.

* The price of the Treasury's 10-year note fell $7.50 per $1,000 invested, and its yield rose to 4.74 percent, from 4.64 percent on Friday.

* The dollar rose against the Japanese yen and fell against the euro. In late New York trading, a dollar bought 107.95 yen, up from 107.63 late Friday, and a euro bought $1.2191, up from $1.2164.

* Light, sweet crude oil for August delivery settled at $36.24, down $1.31, on the New York Mercantile Exchange.

* Gold for current delivery fell to $401.00 a troy ounce, from $402.90 on Friday, on the New York Mercantile Exchange's Commodity Exchange.