Stocks declined Thursday as the dollar gained and jobless claims rose more than expected. Financials were among the hardest hit.
The losses come a day after the Federal Reserve reiterated its special liquidity measures would expire early next year, dragging bank stocks down. Major indexes erased most of their gains.
In Thursday's action, the dollar hit a three-month high versus the euro and was generally stronger across the board following slightly optimistic assessment of the U.S. economy from the Fed. Plus, worries about Greece dragged on the euro.
Oil fell back below $72 a barreland gold dropped below $1,120 an ounce.
The number of U.S. workers filing new applications for jobless insurance unexpectedly rose 7,000to a seasonally adjusted 480,000 last week.
After some debate, Fed Chairman Ben Bernanke was confirmed for a second termby the Senate banking committee; the vote was 16 to 7.
Banks took a hit after analyst Meredith Whitney slashed her earnings forecastfor Goldman Sachs and Morgan Stanley and as Citigroup's secondary offering was priced below expectations at $3.15 per share.
The Treasury followed that news with word that it would not participate in that offering. It issued a statement saying it expects to divest the government's ownership stake in Citi over the next 12 months.
Citigroup shares tumbled about 8 percent, while Goldman and Morgan were off about 1 to 2 percent.
Bank of America shares slipped after the bank named Brian Moynihan as President and Chief Executive Officer as of year's end. He will succeed the retiring Kenneth Lewis.
And package-delivery giant FedEx , a bellwether for the economy, delivered a forecast that fell short of expectations.
Pepsi shares slipped after the soft-drink giant said it won't advertise during the Super Bowlnext year, snapping a 23-year streak, so it can focus on its new marketing plan, which is mostly online.
Elsewhere, Harley-Davidson shares came under pressure after Goldman Sachs added the motorcycle maker to its conviction sell list.