* Fed meeting, more earnings reports awaited
* Pep Boys up after agreeing to be bought by Bridgestone
* Ctrip.com up after deal with Qunar
* Apple biggest drag on indexes
* Indexes down: Dow 0.13 pct, S&P 0.35 pct, Nasdaq 0.30 pct (Updates to open)
By Abhiram Nandakumar
Oct 26 (Reuters) - U.S. stocks were lower in early trading on Monday ahead of this week's Federal Reserve policy meeting and as Apple shares fell a day before it reports quarterly results.
The Fed is not seen raising rates at the two-day meeting but investors will scrutinize its statement on Wednesday for a bearing on when it will pull the trigger.
While Fed Chair Janet Yellen has said the central bank could raise rates this year, it will do so only if there are clear signs of sustained economic growth.
Traders are pricing in only a 6 percent chance of rates being increased at this week's meeting and a 39 percent chance of a December hike, according to CME Group's FedWatch program.
"I don't think it's anything more than an early morning breather after a nice surge in equities," said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey.
Investors are awaiting U.S. home sales data, which is expected to show a decline to an annual rate of 550,000 units in September after two months of gains. The data is expected at 10:00 a.m. ET (1400 GMT).
Apple's shares were down 2.8 percent at $115.73, making it the biggest drag on the three major indexes.
At 9:52 a.m. ET, the Dow Jones industrial average was down 22.18 points, or 0.13 percent, at 17,624.52, the S&P 500 was down 7.3 points, or 0.35 percent, at 2,067.85 and the Nasdaq Composite index was down 14.91 points, or 0.3 percent, at 5,016.95.
Seven of the 10 major S&P sectors were down, with the energy sector's 1.3 percent fall leading the decliners. Oil fell on Monday on a global supply glut.
Wall Street closed higher on Friday after a rally in tech stocks helped the S&P 500 to positive territory for the year.
The three major indexes touched their highest levels since early August, when China's devaluation of its currency sent global markets into a tailspin.
"For the rest of today, I would expect a quiet type of session, digesting the recent gains," Bakhos said.
Strong quarterly results from tech companies have helped improve expectations on overall U.S. third-quarter earnings.
S&P 500 earnings are estimated to have declined a more modest 2.8 percent in the quarter, compared with 4.9 percent forecast at the start of the reporting season, according to Thomson Reuters data.
Valeant Pharmaceuticals was down 7.8 percent at $107.06. The company said it would set up a panel to probe allegations about its associations with specialty pharmacy distributor Philador.
Ctrip.com was up 21.7 percent at $90.50 after the online travel firm said it would merge with Qunar Cayman Islands. Qunar jumped nearly 11 percent to $44.23.
Pep Boys jumped 22.7 percent to $14.71 after it agreed to be acquired by Bridgestone for $15 per share.
Piedmont Natural Gas soared 35.3 percent to $57.13 after it agreed to be bought by Duke Energy. Duke Energy fell 1 percent.
Declining issues outnumbered advancing ones on the NYSE by 1,752 to 976. On the Nasdaq, 1,520 issues fell and 864 advanced.
The S&P 500 index showed 22 new 52-week highs and six new lows, while the Nasdaq recorded 54 new highs and 19 new lows. (Reporting by Abhiram Nandakumar in Bengaluru; Editing by Saumyadeb Chakrabarty)