U.S. equities closed well off session highs Thursday after President Donald Trump said he's willing to act alone on North Korea if China does not step up.
Trump and State Secretary Rex Tillerson also signaled it seeks to remove Bashar Assad from power in Syria, an apparent reversal following a suspected chemical attack the White House has blamed on the Syrian government.
"The market just feels like it's a bit twitchy," said Daniel Deming, managing director at KKM Financial. "It had been trying to hold on to those gains all day, but it's thinking that a lot could happen in the next 24 hours."
The Dow Jones industrial average closed about 15 points higher, with Caterpillar contributing the most gains. The S&P 500 held 0.2 percent higher, with energy leading advancers. The Nasdaq composite ended 0.25 percent higher.
The three major indexes traded about 0.3 percent higher before Trump's comments, which were made as he prepared for a key meeting with Chinese President Xi Jinping.
"There's a lot of noise out in the market right now," said Arian Vojdani, investment strategist at MV Financial. "People are trying to figure out which way to go."
"We've seen a general complacency in the market recently," he said. " But at some point the market will have to take stock of itself."
The two-day meeting was set to begin Thursday in Mar-a-Lago and the two leaders are expected to discuss a series of issues, including trade and North Korea.
"With Trump in the past repeatedly accusing China of keeping its currency at artificially low levels against the dollar and stealing American jobs, the outcome of the meeting is something that remains unknown," said Lukman Otunuga, research analyst at FXTM.
"If Trump decides to play hardball and maintains his harsh rhetoric on China, then risk aversion may intensify consequently sending investor's rushing towards safe-haven assets," he said.
Sentiment on Wall Street was shaky after the Dow and S&P posted their biggest one-day reversal in 14 months Wednesday. The downside turnaround began after the minutes from the Federal Reserve's March meeting showed officials were ready to unwind the central bank's massive $4.5 trillion balance sheet.
Unwinding the balance sheet is significant both because of its sheer size and the impact it could have on markets, as Fed members including Chair Janet Yellen have indicated that the move itself would amount to a rate hike.
"The reaction to the minutes in the market surprised me because [New York Fed President] William Dudley had basically said what was in there a few days ago," said Mike Materasso, senior vice president at Franklin Templeton.
The Fed also said in the minutes it's concerned the stock market may be overvalued.
Also pressuring the market late Wednesday were comments from House Speaker Paul Ryan in which he indicated that tax reform is still a ways off.
"Any signal that jeopardizes tax reform should lead to yields going lower," said Ninh Chung, head of investment strategy and portfolio management at Silicon Valley Bank. "I don't know if we're in the first inning or in Spring Training with tax reform."
U.S. Treasurys held mixed, with the benchmark 10-year note yield near 2.34 percent and the short-term two-year note yield advancing to 1.24 percent.
On the data front, weekly jobless claims fell to 234,000, well below an expected print of 250,000. On Friday, investors will parse through the Bureau of Labor Statisitics' monthly employment report.
"The jobs report at this point carries a little more near-term risk than the China meeting," said Chris Gaffney, president of EverBank World Markets. "'We've built in three rate hikes for this year. I think investors are going to be looking at the average hourly wages and, if those rise," then rate hike expectations could as well.
The dollar rose 0.1 percent against a basket of currencies, with the euro near $1.064 and the yen around 110.8.
Major U.S. Indexes
The Dow Jones industrial average rose 14.80 points, or 0.07 percent, to close at 20,662.95, with Caterpillar leading advancers and Procter & Gamble the top decliner.
The gained 4.54 points, or 0.19 percent, to end at 2,357.49, with energy leading seven sectors higher and telecommunications lagging.
The Nasdaq composite advanced 14.47 points, or 0.25 percent, to close at 5,878.95.
About four stocks advanced for every decliner at the New York Stock Exchange, with an exchange volume of 806.31 million and a composite volume of 3.192 billion at the close.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 12.4.
—CNBC's Jeff Cox and Jacob Pramuk contributed to this report.
On tap this week:
Friday
8:30 a.m. Employment report
10:00 a.m. Wholesale trade
12:15 p.m. New York Fed's Dudley speaks on financial regulation
3:00 p.m. Consumer credit
Watch: Market records around the corner?
