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Wall Street pulls plug on two-day rally; mostly lower as earnings disappoint

U.S. stocks closed mostly lower on Thursday, with the S&P 500 slipping from its record, as Best Buy Co. fell sharply and Wall Street measured results from corporations including Goldman Sachs Group and Citigroup.

"The market is searching for what the trend line is for the fourth-quarter earnings releases; the earnings we've seen so far I'd call mixed," said Jim Russell, senior equity strategist for US Bank Wealth Management. "There's a shift from the rising tide lifting all boats in 2013 related to the Fed policy of QE to much more disparity between winners and losers, which we're starting to see in the retail area and the financial area. Some are able to execute in this slow-growth environment, others maybe not," Russell added.

Goldman Sachs reported a 21 percent drop in quarterly profit; Citigroup posted a lower-than-expected quarterly profit; CSX posted a 5 percent drop in quarterly profit. Shares of all three fell. Best Buy declined 28 percent after the consumer-electronics chain reported a decline in holiday sales.

The retail sales report earlier in the week "showed the economy was moving forward, driven by two-thirds of the economy, which is the consumer," said Andrew Wilkinson, chief market analyst at Interactive Brokers. But within that report, department stores proved to be one of the few areas with a year-over-year decline, which Wilkinson said "comes back to bite us today with the news from Best Buy."

But the trend "is not symptomatic of the health of the consumer, but that people are continuing to migrate to online purchases," said Wilkinson.

Thursday's fall is in large part a consolidation of the gains that came the prior two days, both Russell and Wilkinson said.

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After a 106-point drop, the Dow Jones Industrial Average ended at 16,417.01, down 64.93 points, or 0.4 percent. UnitedHealth Group paced blue-chip losses that extended to 19 of its 30 components. The insurer fell 2.8 percent after reporting an increase in fourth-quarter profit. "We think the key topic today will be how much the worse Medicare Advantage rate outlook for next year would negatively impact 2015 EPS growth," Carl McDonald, a Citi analyst, wrote in a note about United.

The S&P 500 lost 2.49 points, or 0.1 percent, to 1,845.89, with financials falling hardest and utilities faring best among its 10 major sectors.

After wavering between gains and losses, the Nasdaq ended at 4,218.68, up 3.8 points, or 0.1 percent.

The dollar held flat against other global currencies and the 10-year Treasury yield declined by 5 basis points to 2.844 percent.

On the New York Mercantile Exchange, crude-oil futures for February delivery lost 21 cents, or 0.2 percent, to $93.96 a barrel. Gold futures for February delivery rose $1.90, or 0.2 percent, to finish at $1,240.20 an ounce.

Economic reports Thursday had fewer Americans filing applications for jobless benefits last week, and the cost of living climbing 0.3 percent in December, the largest increase since June. And, the National Association of Home Builders reported confidence among home builders declined a bit in January after spiking in December, while the Philadelphia Fed's manufacturing index edged higher to 9.4 in January from a revised 6.4 the prior month.

On Wednesday, the S&P 500 cleared 2014 losses after economic data put a positive spin on factory activity in the New York region and Bank of America reported earnings that beat estimates.

—By CNBC's Kate Gibson

Coming Up This Week:

Thursday: Earnings expected after the close include American Express, Intel, Capital One, People's United Financial and Skyworks Solutions.

Friday: Housing starts at 8:30 a.m. Eastern. Industrial production at 9:15 a.m. Eastern, Consumer sentiment at 9:55 a.m. Eastern, JOLTS at 10 a.m. Eastern. Richmond Fed President Jeffrey Lacker at 12:30 p.m. Eastern. Earnings from General Electric, Morgan Stanley, Schlumberger, Bank of NY Mellon, Comerica, SunTrust, Wipro.

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