Stocks turned lower after several surprisingly weak economic reports and despite a strong debut for LinkedIn's initial public offering.
The Dow Jones Industrial Average fell less than 10 points after snapping a three-day losing streakon Wednesday as oil prices gained.
Intel led the blue-chip average lower after news that Goldman Sachs downgraded the chip maker to "sell" from "neutral," citing slowing shipments on processors, rising competition and increasing capital expenditures. The brokerage also cut its overall view of the semiconductor sector to "cautious" and downgraded Applied Materials to "neutral" from "buy." Hewlett-Packard fell for a third day in the wake of a weak earnings outlook earlier this week. Citigroup cut HP's price target to $45 a share from $65.
TheS&P 500 and the Nasdaq also fell. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 16.
Among key S&P 500 sectors, health care and financials fell, while industrials gained.
The Philadelphia Fed's business activity index tumbled to 3.9 in May from 18.5 in April, a surprising drop. Economists had expected the index to rise to 20, according to Reuters.
And the Conference Board's index of leading indicators fell 0.3 percent in April from a 0.7 percent gain in March. It was the first decline for the index since June 2010, as unemployment cliams have risen and the housing market continues to stumble.
Also, existing home sales fell 0.8 percentin April, according to the National Association of Realtors. Economists had expected home sales to rise.
Initial claims for unemploymentfell by 29,000 to 409,000 in week ended May 14 from an upwardly revised 438,000 claims the week before, the Labor Department said. Economists surveyed by Reuters expected claims to fall to 420,000 from the previously reported 434,000.
The four-week moving average of claims, however, reached a six-month, rising 1,250 to 439,000. Continuing claims fell to 3.71 million in the week ended May 7 from 3.79 million.
Another factor in Thursday's markets is tomorrow's expiration week for stock futures, which can lead to volatility as investors roll over contracts.
LinkedIn began trading at $83 a shareThursday morning, nearly double its pricing at $45 a share. The social networking site for professionals is trading under the symbol LNKD.
Meanwhile, Glencore , the world's largest diversified commodities trader, priced its $10 billion IPO in the Hong Kong and the UK on Wednesday.
The dollar fell against a basket of currencies. Oil prices slippedafter the U.S. economic data showed signs of a sluggish economic growth. U.S. light, sweet crude fell below $99 a barrel, while in London, Brentcrude fell below $112.
On the earnings front, Sears shares dropped after reporting a wider-than-expected losson declining sales.
But Dollar Tree beat profit expectations as the low-priced chain continued to benefit from shoppers trying to get the most for their money.
GameStop sank after video game retailer delivered a disappointing second quarter earnings outlook, despite stronger-than-expected results for the first quarter.
In M&A news, Thermo Fisher Scientific is buying Phadia, a privately-held Swedish company, for about $3.5 billion in cash. Phadia makes blood test systems.
Meanwhile, Sen. Carl Levin, chairman of the panel investigating the causes of the financial crisis, said Thursday he was hopeful that investigators would act on the findings of his report—published last month—which found Goldman Sachs misled Congress over its involvement in the crisis.
Data out of Japan also showed the countryhad fallen into recession in the first quarteras a result of the earthquake.
Shares in Europe closed higher, led by energy stocks.
On Tap This Week:
THURSDAY: Existing home sales, Philadelphia Fed survey, leading indicators, money supply, Halliburton shareholder meeting, Intel shareholder meeting, McDonald's shareholder meeting, Sallie Mae annual meeting, LinkedIn IPO; earnings from GameStop and Sears before-the-bell and Gap after-the-bell.
FRIDAY: JCPenney shareholder meeting, Macy's shareholder meeting, Time Warner shareholder meeting; earnings from Ann Taylor before-the-bell.
More on CNBC.com