* Both S&P 500 and Dow coming off record closing highs
* Tesla Motors rallies after profit outlook
* European markets closed
* Dow off 0.1 pct, S&P down 0.4 pct, Nasdaq falls 0.7 pct
By Caroline Valetkevitch
NEW YORK, April 1 (Reuters) - U.S. stocks fell on Monday, with the S&P 500 pulling back from its record closing high last week, as weaker-than-expected U.S. manufacturing data gave investors reason to book profits.
The Institute for Supply Management's March manufacturing reading of 51.3 continued to show expansion, but activity slowed from the 54.2 reading in February.
A separate report showed construction spending rose more than expected in February, gaining 1.2 percent, above forecasts of a 1 percent rise.
Recent data has pointed to a strengthening U.S. economy in general, however, and has helped push stocks to new record highs on both the Dow and S&P 500. That's likely to mean market pullbacks will be short-lived, analysts said.
"The economy is still improving ever so slowly, so I think there's room for the market to go up," said Bryant Evans, investment advisor and portfolio manager at Cozad Asset Management, in Champaign, Illinois.
During the session, the biggest drag on both the S&P 500 and Nasdaq 100 indexes was Apple Inc, whose shares fell 2 percent to $433.63, Portfolio manager Will Danoff, whose $92 billion Fidelity Contrafund is the largest active shareholder in Apple, cut the fund's stake in the iPhone maker 10 percent during the first two months of 2013.
The benchmark S&P index remains below its record intraday high of 1,576.09, but moves may be limited this week in the absence of major catalysts before the closely-watched U.S. payrolls report on Friday.
The S&P 500 ended March with a record closing high, and posted its best quarterly performance in a year despite recent problems in Cyprus that have weighed on sentiment.
The Dow Jones industrial average was down 16.05 points, or 0.11 percent, at 14,562.49. The Standard & Poor's 500 Index was down 6.38 points, or 0.41 percent, at 1,562.81. The Nasdaq Composite Index was down 24.05 points, or 0.74 percent, at 3,243.47.
For the year, the S&P is up 9.5 percent, the Dow is up 11.1 percent and the Nasdaq is up 7.4 percent. The Dow first surpassed its record highs in early March.
With the strong start to the year, many investors have anticipated a pullback, with the market potentially facing more downside risks as uncertainty continues over the economic situation in Cyprus. European markets were closed on Monday for a holiday.
In company news, Tesla Motors Inc surged 16 percent to $43.96 after forecasting full profitability in the first quarter, citing strong sales of its Model S sedan.
Dell Inc warned that it would be dangerous to take on a lot of debt and remain a public company given its worsening profit outlook, in a sign that it views proposals from Blackstone Group LP and billionaire investor Carl Icahn as fraught with risk. The comments came on Friday, which was a holiday for U.S. markets.
Shares of Dell dipped 0.2 percent to $14.29.