The major averages gave up opening gains of about 0.8 percent to fall more than 1 percent at session lows, before approaching the flatline as the close neared.
The euro reversed an initial decline to hit its highest against the U.S. dollar in nearly a month after ECB President Mario Draghi surprised markets by saying he didn't anticipate a need to reduce rates further, although new facts can change the situation and the outlook.
"Today's not a question of did Draghi do more or less than expected. He's just doing more of what has not worked. ... We're bumping up against limits," said Peter Boockvar, chief market analyst at The Lindsey Group.
With Thursday's mixed close, the major averages were on pace for a weekly decline, after three-straight weeks of gains.
Energy briefly fell more than 1 percent before squeezing out a gain of 0.11 points. Materials and telecommunications led advancers in the S&P 500.
"I think (the sell-off) was expected. 'Sell the news.' I think the speech showed (ECB) President Mario Draghi showed reluctance to lower rates into further negative territory." said Ilya Feygin, managing director and senior strategist at WallachBeth Capital, noting the pullback in energy followed a recent rally driven mostly by short covering.
U.S. crude oil futures settled down 45 cents, or 1.18 percent, at $37.84 a barrel.
Reuters, citing sources, reported just before the opening bell that a meeting between OPEC and non-OPEC producers is unlikely to happen on March 20 as Iran has yet to commit to an oil production freeze.
John Caruso, senior market strategist at RJO Futures, said Draghi's comment was "pretty alarming."
"Any further cuts they basically shut the door on and the market is forward-looking so it doesn't know how to react. There's a lot of price discovery going on," he said, noting "the currency trade might be the biggest thing to watch at the moment."
The euro extended earlier gains in afternoon trade, rising above $1.12 to its highest since Feb 15. The euro initially turned lower following the ECB announcement to trade near $1.08, its lowest since Feb. 1.
"We bounced back now (in the euro) as Draghi is basically saying this is it," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman.
The U.S. dollar index traded more than 1 percent lower. The yen was at 113.13 yen against the greenback.
With the intraday reversal, the euro was trading more than 3 percent higher from its lows against the dollar. In the history of the currency, there hasn't been a single day where the euro was down 1 percent intraday and rallied back more than 3 percent off that level, according to Bespoke.
"The market is making this general assumption the (ECB stimulus measures are) done. So people are covering their short positions," said Jason Leinwand, managing director at Riverside Risk Advisors. "I personally think the euro is going to trade lower irrespective of whether or not the ECB comes in June and does additional easing."
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Earlier, the major averages held higher in choppy trade after the ECB announced more stimulative measures, including expansion of its asset purchase program and rate cuts.
"To the extent Mario Draghi clearly disappointed last time, he's clearly surpassing expectations here," said Art Hogan, chief market strategist at Wunderlich Securities.
Dow futures traded about 40 points higher after earlier adding more than 150 points after the ECB cut the deposit rate to negative 0.4 percent from minus 0.3 percent, charging banks more to keep their money with the central bank. The refinancing rate was also cut, down 5 basis points to 0.00 percent.
The central bank also increased its asset purchase program from 60 billion euros to 80 billion euros a month, beginning in April.
"I think the market's very confused at the moment. Here we are on the back of a one-month rally in stocks. If investors start to feel confused they might start to be pulling some profits off the table," Caruso said.