U.S. stocks erased record-setting gains on Thursday, turning lower in a late-session shift as cheer over the European Central Bank's unexpected rate cut faded, a day ahead of the monthly payrolls report.
"The ECB is behind us, and what's the next catalyst? The jobs report tomorrow has pulled our enthusiasm," said Art Hogan, chief market strategist at Wunderlich Securities.
The ECB lowered its benchmark interest rate to 0.05 percent, and cut its deposit facility to minus 0.2 percent.
The central bank's "non-conventional methods of easing credit will hopefully boost inflation and reverse the deflationary scenario," said Peter Cardillo, chief market economist at Rockwell Global Capital.
"You can see markets remain somewhat cautious; we're seeing signs of fatigue setting in," said Cardillo, who added the market is in an overbought condition and that "some sort of a pullback is looming."
"We still have the Dow and S&P 500 within shouting distance of all-time highs," noted Hogan.
Major U.S. Indexes
After topping its all-time high set Aug. 26, the Dow Jones Industrial Average dropped 8.7 points, or nearly 0.1 percent, to 17,069.58, with Walt Disney, Chevron and Exxon Mobil leading blue-chip losses.
After extending its record run to an all-time high, the slid 3.07 points, or 0.2 percent, to 1,997.65, with energy leading losses among its 10 major sectors.
PVH rallied after the owner of the Tommy Hilfiger and Calvin Klein brands reported second-quarter earnings that beat estimates.
Shares of BP fell sharply after a federal judge ruled the company had acted with gross negligence in the 2010 oil spill in the Gulf of Mexico that killed 11 people.
Read MoreCourt: BP grossly negligent, conduct reckless
The Nasdaq lost 10.28 points, or 0.2 percent, to 4,562.29.
The CBOE Volatility Index, a measure of investor uncertainty, rose 2.4 percent to 12.64 percent.
For every share rising, two fell on the New York Stock Exchange, where 627 million shares traded. Composite volume neared 3.1 billion.
The dollar gained against other global currencies including the euro; the yield on the 10-year Treasury added 5 basis points to 2.453 percent.
The price of gold fluctuated between gains and losses, with futures for December delivery off $3.80, or 0.3 percent, at $1,266.50 an ounce; crude-oil futures for October delivery fell $1.09, or 1.1 percent, to $94.45 a barrel.
Stocks held near record highs after a measure of the U.S. service sector in August came in better than expected.
Read MoreUS service sector booms in August, hits nine-year high
Stock futures had held gains after the August ADP employment report found the private sector added 204,000 jobs last month. Separately, the government reported 302,000 jobless claims were filed last week.
"Despite the tight labor market, wages are not careening out of control and appear to pose little if any threat to the Fed's steady policy stance," offered Andrew Wilkinson at Interactive Brokers.
Another report had the U.S. trade deficit narrowing in July to a six-month low as exports rose to a record.
On Wednesday, the S&P 500 cleared gains after hitting an all-time high, as investors shifting through mixed reports on talks to halt fighting in Ukraine.
—By CNBC's Kate Gibson
Coming Up This Week:
Friday:
8:30 a.m. Eastern: Nonfarm payrolls for August
8:30 a.m.: Unemployment rate for August
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