In midday trading, the Standard & Poor’s 500-stock index fell 0.45 percent, the Dow Jones industrial average was 0.33 percent lower and the Nasdaq was off 0.41 percent.

Investors are looking ahead to Wednesday’s statement from the Federal Reserve for clarity on when the Fed will begin to pare its $85 billion in monthly bond purchases. According to a poll of economists conducted by Reuters on July 22, the Fed is most likely to begin tapering its quantitative easing stimulus in September.

Until recently, investors have embraced average or weak data with the expectation that the Fed will continue to stimulate the economy and put a floor on stock prices. The prospect of a slightly less accommodative Fed in the near future, however, has increased the market’s need for stronger economic data.

The National Association of Realtors reported on Monday that the number of Americans who signed contracts to buy homes fell slightly in June from May, signaling that sales could stabilize in the next few months.

Its seasonally adjusted index for pending home sales declined 0.4 percent, to 110.9, in June. The May reading was also revised lower by a percentage point, to 111.3, but it was still the highest level since December 2006.

Data on the industrial sectors is also scheduled in the first half of the week, followed by gross domestic product for the second quarter on Wednesday and the closely watched jobs report on Friday.

On the earnings front, the hotel, energy and financial services conglomerate Loews Corporation posted an increase in second-quarter profit, as revenue from its insurance arm, CNA Financial, increased nearly 13 percent. Its shares rose slightly in early trading.

“Earnings have been good so far, but they have come in low-quality,” said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh. “We haven’t really seen margin expansion or a lot of revenue growth and that can keep a lid on the markets in the short term.”

Halfway through earnings season, 67.6 percent of S.&P. 500 companies have beaten analysts’ expectations for profit, in line with the 67 percent average of the last four quarters. About 56 percent of the companies have beaten revenue expectations, more than the 48 percent average of the last four earnings seasons but below the historical average.

Shares in Wynn Resorts were up 0.24 percent in midday trading after the casino developer reported second-quarter results.

Merger activity could give equities support as big deals show that large investors see value in the market.

On Monday, the American drug maker Perrigo agreed to buy the Irish drug company Elan in a deal valued at $8.6 billion. Shares in Elan rose were 4.5 percent higher, at $15.60, at noon.

Shares in the advertising sector climbed after Publicis and Omnicom announced on Sunday that they would merge, as investors bet the deal would create an opening for rivals to lure defecting clients and potentially lead to more deals.

The merger also could bring rival accounts like Coca-Cola and PepsiCo under one firm. Omnicom shares gained more than 6 percent in early trading.

Hudson’s Bay, the operator of the department store chains Lord & Taylor in the United States and The Bay in Canada, said it would buy Saks Inc. for $16 per share. Shares in Saks gained 3.6 percent, to $15.86.

A fall in bank stocks, caused by speculation that Barclays might have to raise capital, weighed on European equities on Monday, causing an earlier increase in the markets to fizzle out.

The Pan-European FTSEurofirst 300 index closed flat at 1,205.18 points, while the euro zone’s blue-chip Euro STOXX 50 index slipped 0.1 percent, to 2,738.22 points.

Banking was the worst-performing European equity sector, as the British lender Barclays declined by 4 percent after the bank was hit by expectations that it might have to embark on a £4 billion rights issue in order to meet tougher British rules on capital requirements.

With investors bracing for another round of disappointing economic news from China, the world’s No. 2 economy after the United States, Asian markets have been generally weaker.

Japan’s Nikkei dropped 3.3 percent, to a four-week low of 13,661.13 points, as those jitters were compounded by a stronger yen and concerns that plans to increase the country’s sales tax — Japan’s most significant fiscal reform in years — could be watered down.

Hong Kong’s Hang Seng was also weaker, falling 0.54 percent, to 21,850.15 points, while the Kospi in South Korea was off 0.57 percent, at 1,899.89.

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This trading sleight of hand has been around Wall Street for a while. But as regulators press for banks to be safer, demand for these maneuvers — known as capital relief trades or regulatory capital trades — has been growing, especially in Europe.

Citigroup, Credit Suisse and UBS have recently completed such trades. Rather than selling the assets, potentially at a loss, the banks transfer a slice of the risk associated with the assets, usually loans. The buyers are typically hedge funds, whose investors are often pensions that manage the life savings of schoolteachers and city workers. The buyers agree to cover a percentage of losses on these assets for a fee, sometimes 15 percent a year or more.

The loans then look less worrisome — at least to the bank and its regulator. As a result, the bank does not need to hold as much capital, potentially improving profitability.

“I think we are going to see more of these type of trades in the U.S. given the demands by regulators to hold more capital,” said Kevin White, a former executive at Lehman Brothers who founded Spring Hill Capital Partners, which is working with banks to structure regulatory capital trades.

Citigroup, Credit Suisse and UBS declined to comment on their trades. Privately, however, bankers acknowledge that while these trades may be pushing risk into a less regulated corner of Wall Street, they also point out that the risk is being moved into a less systemic part of the financial industry than the big banks.

The rule-writing going on as part of the Dodd-Frank financial regulatory overhaul may prevent some of these trades, but bankers say this will simply force them to structure the trades differently.

Some regulators say they are concerned that in some instances these transactions are not actually taking risk off bank balance sheets. For instance, a financial institution may end up lending money to clients so they can invest in one of these trades, a move that could leave a bank with even more risk on its books.

Critics point to other reasons to worry. Most of these trades are structured ascredit-default swaps, a derivative that resembles insurance. These kinds of swaps pushed the insurance giant American International Group to the brink of collapse in September 2008. Another red flag is that banks often use special-purpose vehicles located abroad, frequently in the Cayman Islands, to structure these trades.

“These trades allow the banks to go to regulators and say the risk is gone,” said Anat R. Admati, a professor of finance at Stanford University. “But it’s not gone at all; it’s just been pushed into a murky corner of the market.”

The trades can take many forms, but typically a bank will buy a credit-default swap on some of its loans from a special-purpose vehicle, which is financed by outside investors. If all goes well, the investors receive an annual fee for taking on this risk. But in the worst case, where the loans in the portfolio default, the insurance that the bank has bought kicks in and covers its losses. The investors on the other side are wiped out.

A number of American investment firms like Spring Hill Capital Partners have been trying to find investors for these deals. Glenn Blasius, another Lehman alumni, said he was raising money for the Ovid Regulatory Capital Relief Fund, which will invest in these trades.

The Orchard Global Capital Group has raised a fund to invest in regulatory capital trades, and the New Mexico Educational Retirement Board is among its investors.

In December 2011, Allan Martin, a representative with an investment consultant firm that advises pension funds, met with the New Mexican pension fund over investing through Orchard in a regulatory capital trade, according to the minutes of a board meeting.

Mr. Martin explained to the retirement board that these transactions had been created to allow the banks “to continue to hold the assets on their balance sheet” while selling some of the risk.

At the meeting, Jan Goodwin, executive director of the New Mexico Educational Retirement Board, asked about the use of credit-default swaps, which got A.I.G. into trouble. Mr. Martin admitted that the Orchard deal “has a little flavor of that” but said Orchard had done “a great deal” of due diligence on the underlying collateral, something he said A.I.G. often didn’t do.

In an interview, Mr. Martin said that “a lot of clients ask how this is different than A.I.G.,” and he said it was because Orchard had a better understanding of the risks involved in the assets it was dealing with.

An executive with Orchard did not respond to requests for comment.

Many major banks have structured these trades. In March, Credit Suisse completed a transaction named Lucerne, after the Swiss lake, in which it bought insurance on a 5 billion Swiss franc portfolio of small and medium-size Swiss business loans, according to people who were briefed on the matter but not authorized to speak on the record because they had signed confidentiality agreements.

Credit Suisse agreed to take a small percentage of the losses, and it lined up American and European investors willing, for an annual fee of roughly 10 percent, to assume the rest of the risk, these people say.

Citigroup cut a deal at the end of last year with the private equity firm Blackstone Group, which insured the big bank against a portion of the losses on a roughly $1 billion pool of shipping loans. The bank used a special-purpose vehicle in Ireland called Cloverie to facilitate the trade, according to people briefed on the matter but not authorized to speak on the record.

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The early signs are discouraging, lawmakers say. After concerns surfaced that a consulting firm was bungling the broad review of foreclosures, regulators wrote to the firm, complaining about the conduct but did not fire the consultant, said Congressional officials with knowledge of the matter who were not authorized to speak publicly.

The use of consultants, who are paid by the same banks they are expected to help reform, will be examined at a Senate Banking Committee hearing on Thursday. Senator Sherrod Brown, the Ohio Democrat leading the hearing, is examining whether regulators inappropriately “outsource” oversight like the foreclosure review to consultants like Deloitte & Touche and Promontory Financial Group.

Since the foreclosure review was scuttled in January, some regulators have been exploring new ways to curb the use of consultants and correct problems that occur, according to testimony prepared for the hearing.

“While the use of independent consultants can be an effective supervisory tool, there are certainly lessons to be learned from our experience, and we believe we can improve the process going forward,” Daniel P. Stipano, a senior official at the Office of the Comptroller of the Currency, said in the testimony. The agency plans to “enhance our oversight of the consultants when they are utilized,” he said.

But challenges remain. Mr. Stipano is expected to cite legal limitations that undercut the regulator’s authority over consultants. Those constraints stem from 2006 when the comptroller’s office levied a $300,000 fine against Grant Thornton, a firm that audited the books of First National Bank of Keystone in West Virginia, which collapsed in 1999. Grant Thornton, the comptroller found, ignored “unequivocal, written evidence” that the bank had not accounted for much of its assets, a major discrepancy that the consultant did not flag.

When the firm challenged the fine, a federal appeals court in Washington overruled the comptroller. The court said that the regulator had “exceeded his statutory authority.”

At the hearing on Thursday, Mr. Stipano is expected to petition lawmakers for greater authority. In the prepared testimony, he said the comptroller’s office “would welcome a legislative change in this area that would facilitate our ability to take enforcement actions directly against independent contractors that engage in wrongdoing.”

Even if regulators gain new powers to curb the use of consultants, their ties to the firms may prove difficult to untangle. Since the financial crisis, the comptroller has ordered banks to hire consultants in more than 130 enforcement actions, or roughly 15 percent of the cases, an analysis of government records shows.

Further complicating the relationships, consultants like Promontory have forged close ties to the regulators, routinely hiring from government ranks. Promontory was founded by Eugene A. Ludwig, a former comptroller of the currency. Last week, it hired Mary L. Schapiro, who led the Securities and Exchange Commission until late last year.

In addition to Deloitte and PricewaterhouseCoopers employees, a Promontory executive, Konrad Alt, will testify at the Senate hearing. Mr. Stipano, of the comptroller’s office, will be joined by Richard M. Ashton, deputy general counsel at the Fed.

The hearing will occur a week after the Government Accountability Office issued a scathing report faulting regulators for the flawed mortgage foreclosure review. The regulators, the report found, failed to properly coordinate a review of foreclosed loans and potentially allowed some errors to go undetected.