U.S. equities closed mostly lower on Thursday as declines in tech offset a rally in financial stocks, while investors digested economic data and rising oil prices.
The Dow Jones industrial average rose about 70 points, with Goldman Sachs contributing the most gains. The S&P 500 fell about 0.4 percent, with information technology falling more than 2 percent while financials gained more than 1.5 percent.
"What we're seeing here is a vicious rotation out of sectors that were leading before the election and into sectors that have led since," said Adam Sarhan, CEO at 50 Park Investments. "The damage being done can't be ignored." "That type of rotation is not seen in young, healthy bull markets."
The Nasdaq composite underperformed, falling about 1.4 percent as Apple and most of the so-called FANG stocks (Facebook, Amazon, Netflix and Google parent Alphabet) fell. The Nasdaq 100 shed more than 1.5 percent, giving up its post-election gains.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded about 8.6 percent higher, near 14.5. "There's a lot of speculation about what's going to happen with taxes, regulation, trade policy, etc.," said John Stadtler, head of U.S. Financial Services at PwC. "I think investors are trying to figure out how those different scenarios affect different firms." "The volatility you're seeing is people trying to determine those different scenarios."
Earlier in the session, energy stocks had popped more than 1 percent, boosted by even more sharp gains in oil, before closing about 0.3 percent. West Texas Intermediate futures for January delivery rose 3.28 percent to settle at $51.06 per barrel, a day after spiking more than 9 percent. On Wednesday, OPEC and Russia agreed to restrict production, even as analysts warned other producers were likely to top up supply.
Jeremy Klein, chief market strategist at FBN Securities, said in a note that he expects crude to trade above $60 by next summer. " I reiterate that the fundamental story surrounding the commodity will flip from one fraught with supply concerns to one optimistic about burgeoning global demand," he said.
The Dow and S&P both hit record highs Wednesday before pulling back, buoyed by a sharp rise in energy stock prices. Wednesday was also the last trading day of November, a month which saw the major indexes soaring into record highs after President-elect Donald Trump stunned the world with his U.S. election win.
"While I think the fundamentals continue to improve, ... the rally has been pretty dramatic," said Randy Frederick, vice president of trading and derivatives at Charles Schwab. "I think we're seeing signs of the market topping out a bit."
"The market's rise, while it may continue for a bit, might be flattening out and the upside will be far more limited than what we've seen," he said.
In economic news, The IHS Markit U.S. Manufacturing index reading for November came in at 54.1. "This was mainly driven by domestic sales, as new orders from abroad increased only marginally since the previous month, with survey respondents citing competitive pressures and the strong dollar," IHS Markit said.
The ISM manufacturing index came in at 53.2 for November, while construction spending rising 0.5 percent for October. Before the bell, initial jobless claims came in at 268,000, above an expected 253,000. Thursday's litany of data will build up towards Friday's November jobs report.
"We have the jobs report due tomorrow, but I think people are trying to figure out what to do with it. Everything is baked in," said JJ Kinahan, chief market strategist at TD Ameritrade.
Market watchers have paying close attention to U.S. economic data, as a Federal Reserve rate increase on Dec. 14 becomes more likely. According to the CME Group's FedWatch tool, market expectations for a rate hike are about 99 percent.
"I can't see them surprising the market be not raising rates because of the Fed funds futures and because of they're credibility," said Kinahan. "They came into the year saying four rate hikes; we're looking at one."
U.S. Treasury yields rose Thursday, with the benchmark 10-year note yield at 2.4417 percent and the two-year note yield around 1.147 percent. The U.S. dollar slipped 0.5 percent against a basket of currencies, with the euro near $1.066 and the around 113.9.
In corporate news, Land's End and Dollar General both reported quarterly results before the bell. Meanwhile, Clarcor is being bought by Parker Hannifin for $4.3 billion in cash and assumed debt, or $83 per share.
Major U.S. Indexes
The Dow Jones industrial average rose 68.35 points, or 0.36 percent, to close at 19,191.93, with Goldman Sachs leading advancers and Intel the biggest decliner.
The fell 7.73 points, or 0.35 percent, to end at 2,191.08, with information technology leading six sectors lower and financials the biggest riser.
The Nasdaq composite fell 72.57 points, or 1.36 percent, to close at 5,252.
About nine stocks declined for every five advancers at the New York Stock Exchange, with an exchange volume of 1.145 billion and a composite volume of 4.975 billion at the close
Gold futures for February delivery fell $4.50 to settle at $1,169.40 per ounce.
—CNBC's Peter Schacknow and Reuters contributed to this report.
On tap this week:
Thursday
Monthly vehicle sales
Earnings: Ulta Salon, Lands' End, Kroger, Express, Canadian Imperial Bank, Ambarella, Workday, Smith & Wesson, Five Below, Ascena Retail
Friday
Earnings: Big Lots
8:30 a.m. Employment report
12:30 p.m. Fed Gov. Daniel Tarullo
12:30 p.m. Cleveland Fed's Mester