The Dow Jones industrial average declined 85.45 points to close at 23,348.74; it briefly fell more than 100 points.

That report "is absolutely hitting the market," said Dave Lutz, head of ETF trading at JonesTrading. "We started reversing as soon as the headline hit."

Bloomberg reported the plan being discussed by the House would leave the corporate rate at 20 percent by 2022. The gradual plan is "has been considered" but is not final, according to the report.

Stocks fell on Monday after a report surfaced saying the House is considering a plan that would gradually lower the U.S. corporate tax rate.

Traders work on the floor of the New York Stock Exchange.

Expectations of tax cuts have increased recently after the House passed a budget plan backed by the Senate. The budget's approval in the House lets the Senate pass legislation with a simple majority, instead of the 60 vote supermajority typically needed to end debate and move a bill to a vote.

"I would say a lot of it has been priced in, at least if you look at the Russell 2000 as a proxy for the beneficiary of lower taxes," Peter Boockvar, chief market analyst at The Lindsey Group, told CNBC's "Halftime Report."

The Russell 2000 closed 1.15 percent lower following the report's release, marking its worst day since Aug. 17. The index is made up of shares of small-cap companies, which have more to gain from an immediate domestic tax cut since they are more likely to be U.S.-based and not sprawling global entities.

The S&P 500 closed 0.3 percent lower at 2,572.83 following the report. GM and Advanced Micro Devices were among the worst performers in the S&P 500.

Shares of Advanced Micro Devices fell 8 percent after Morgan Stanley analysts warn demand for cryptocurrency mining chips will be cut in half.

"We expect cryptocurrency to gradually fade from here, consoles to decline, and graphics to be flattish," analyst Joseph Moore said in a note.

General Motors pulled back 2.8 percent after Goldman Sachs downgraded the stock to sell, noting it sees a 28 percent downside over the next 12 months for the stock.

"Our work on pickup trucks and crossovers suggest that GM likely experiences volume and mix headwinds that exacerbate the cyclical profit headwinds," Goldman analyst David Tamberrino said in a note Monday.

Shares of GM have handily outperformed the broader market, rising 28.1 percent year to date. AMD shares, meanwhile, have lagged the S&P 500 in 2017, having gained 4.4 percent. The S&P 500 is up 15.3 percent in 2017.

The Nasdaq composite finished just below breakeven at 6,698.96 after hitting an intraday record earlier in the session.