Stocks eased off their lows but still closed in negative territory Thursday, with the S&P snapping a three-day win streak, following Google's premature earnings announcement that disappointed investors.
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Google shares ended sharply lower in heavy trading after being halted for nearly 2-1/2 hours. The company posted earnings of $9.03 a share, widely missing expectations for $10.65 a share. The tech giant was originally scheduled to report after the closing bell. Shares were down as much as 10 percent immediately after the announcement.
The Dow Jones Industrial Average snapped a four-day win streak, erasing 8.06 points, or 0.06 percent, to end at 13, 548.94, dragged by IBM and AmEx .
The CBOE Volatility Index, widely considered the best gauge of fear in the market, closed near 15.
Google also reported its average cost-per-click declined 15 percent compared to the third quarter a year ago.
Shares of Internet companies Microsoft , Facebook and Yahoo also declined.
"Earlier this morning R.R. Donnelley, the financial printer, informed us that they had filed our draft 8K earnings statement without authorization, " said Google in a statement.
Meanwhile, R.R. Donnelley tumbled following the Google early release.
"While still light overall, Google numbers are not as bad as they initially appeared, " wrote JPMorgan in a note. "We'd be taking advantage of the sharp sell off."
On the economic front, weekly jobless claims rebounded 46, 000 to a seasonally adjusted 388, 000, hitting the highest level in four months, according to the Labor Department.
Last week, claims unexpectedly tumbled to 339, 000, hitting the lowest level since February 2008, but the report was distorted by one large state not posting its claims number for the week as expected.
Also on the economic front, leading indicators jumped in September to post its largest gain in seven months, according to the Conference Board. And factory activity in the U.S. mid-Atlantic region climbed in October, according to the Philadelphia Federal Reserve Bank's business activity index.
"The jobless claims number was a bit worse than we were expecting, while earnings have been largely mixed as well, " said Alan Valdes, director of floor operations at DME Securities. "We also have options expiration tomorrow so expect more volatility then."
European shares eked out a gain as EU leaders prepare to meet at a summit in Brussels where they will try to bridge differences over plans for a banking union, a step to solve the ongoing sovereign debt crisis. This marks the fourth time EU leaders have met this year and the 22nd summit held since the start of the crisis in 2009.(Read More: Cost of Four Euro Exits? $22 Trillion—Study)
However, European officials are not expected to discuss Greece, Spain or Cyprus at the summit, according to a Reuters report. Meanwhile, a 24-hour general strike is expected in Greece on Thursday.
Among earnings, Morgan Stanley reported quarterly earnings and revenue that beat analysts' expectations. Still, shares were lower, along with other major financials.
Verizon edged higher after the wireless telecommunications company posted earnings that matched expectations, while revenue topped Wall Street estimates.
Dow component Travelers posted earnings that topped expectations, while revenue fell slightly short. Travelers was able to increase rates in all business lines and also retain customers, a strong sign for the rest of the industry. The company has been a bellwether for insurers' ability to raise pricing after years of weakness. Other insurance companies including ACE and Chubb also climbed.
Microsoft, AMD and Capital One are among major companies scheduled to report earnings after the closing bell.
Ebay jumped a day after the online auction website topped profit expectations by a penny and offered current-quarter guidance and a full-year earnings outlook that matched expectations. In addition, at least four brokerages boosted their price target on the company.
So far, nearly 20 percent of S&P 500 firms have posted earnings results this quarter. Sixty-five percent of companies have topped earnings expectations, while 20 percent have missed, according to data from Thomson Reuters.
If all remaining companies report earnings in line with estimates, earnings will be down 1.5 percent, from last year's third quarter.
—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
Coming Up This Week:
FRIDAY: Existing home sales; Earnings from GE, McDonald's, Schlumberger, Honeywell, Edward Lifesciences