U.S. stocks fell on Thursday as government data prompted downward revisions to U.S. economic growth in the second quarter and after James Bullard, head of the Federal Reserve Bank of St. Louis, said interest rates could increase sooner than expected.
"I didn't think today's number was all that disturbing, other than in context of investors are looking for a reason to sell," Mark Luschini, chief investment strategist at Janney Montgomery Scott, said of a smaller-than-expected 0.2 percent rise in personal spending in May.
And, while the market was rattled by comments from Bullard, Luschini was among several market observers who pointed out that the Fed official's comments were not new in the sense he has offered a similar take before.
Bullard, a non-voting member of the Federal Open Market Committee, on Thursday told Fox Business Network the Fed's first interest rate hike could come at the end of the first quarter of 2015, reiterating what he told reporters following a May 16 speech in Little Rock, Ark.
Financials were among the hardest shares hit in the wake of a fraud lawsuit against Barclays, with U.S.-listed shares of the British bank falling sharply. GoPro rallied in the wearable sports camera maker's market debut; and ConAgra Foods rose after the maker of Hunt's tomato ketchup and Slim Jim beef jerky posted better-than-expected quarterly revenue.
"Before today's PCE (personal consumption expenditure), income and spending data, there were those who were looking for a 4 percent GDP growth rate in the second quarter. Those revisions are coming in now with data we received today, and they are closer to 3 percent, 3.5 percent than 4 percent," said Art Hogan, chief market strategist at Wunderlich Securities.
Goldman Sachs reduced its second-quarter GDP tracking estimate by five-tenths to 3.5 percent after Thursday's reports.
"We often make too much of what hawkish, non-voting Fed members say," said Hogan, who described the central banker as being "hawkish since the middle of last summer."
Another report had U..S. jobless claims declining by 2,000 to 312,000 last week, in line with expectations.
The fell 2.31 points, or 0.1 percent, to 1,957.22, with consumer staples and financials leading sector losses and utilities and energy the best performing among its 10 major sectors.
The Nasdaq declined less than 1 point to 4,379.05.
For every seven shares falling, eight rose on the New York Stock Exchange, where nearly 592 million shares traded. Composite volume neared 2.8 billion.
The dollar held steady against the currencies of major U.S. trading partners; the 10-year Treasury yield used in determining mortgage rates and other consumer loans fell 3 basis points to 2.531 percent.
On Wednesday, U.S. stocks gained, with the Dow Jones Industrial Average and the S&P 500 bouncing back after a two-day drop, as Wall Street wagered the economy is rebounding after its worst quarterly performance in five years.
—By CNBC's Kate Gibson
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8:30 a.m.: Personal income
8:30 a.m.: Consumer spending
9:55 a.m. Consumer sentiment index
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