U.S. stocks closed mildly lower on Thursday as equities failed to shake off the losses of the last three days and investors weighed geopolitical events ahead of earnings season.
"I'm a little disappointed the market couldn't continue (higher) after last week," said Bruce Bittles, chief investment strategist at RW Baird. "It suggest something's not quite right."
He noted overwhelmingly bullish sentiment amid the recent selloff, which "suggests to me a tired market. It's a little complacency plus you've got first quarter earnings ahead.
Still, analysts were encouraged that the S&P 500 held above its 100-day moving average of about 2,040 and looked for the index to break upper resistance.
We "got down to the 100-day moving average on the S&P 500 (and) triggered that (bounce) and that level has held," said Robert Pavlik, chief market strategist at Boston Private Wealth, noting the next resistance level is 2,068. "I'm cautious on this bounce. In the overall order of things I think the market is trying to consolidate" ahead of earnings season.
Stocks attempted to hold slight gains in afternoon trade, recovering from an initial drop in the open that sent the Dow Jones industrial average more than 100 points lower and the Nasdaq off 1 percent.
"If the market can turn around here and turn positive on the day, then there's likely enough pent-up buying pressure to push the S&P back up toward the 2,073 level (which has been a pivotal point for several months)," Jeff Clark, analyst at Stansberry Research, said earlier. "I'm not saying that's going to happen in the next day or so. But, there is the potential for it to happen."
The iShares Nasdaq Biotechnology ETF closed 0.14 percent lower after struggling for direction throughout the day. The sector led the recent selloff by falling close to its 50-day moving average.
Jeffrey Loo, biotech analyst at S&P Capital IQ, said that "overall the fundamentals of the sector (are) still pretty solid." He expects earnings growth over the next couple of years, although not as high as in 2014.
"The sales potential for drugs approved in 2013, 2014 are tremendous," he said, noting that tangible results are still 5 to 6 years out.
"The pullback is broad-based but really concentrated in high beta sectors (of) biotechs and semiconductors," said Katie Stockton, chief technical strategist at BTIG. "The good news is the pullback has not generated a lot of breakdown."
The Dow transports broke through its 200-day moving average but closed off lows, down 0.57 percent.
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Marc Chaikin, CEO of Chaikin Analytics, said the Dow transports are the greatest driver of the market decline, briefly breaking its 200-day moving average as Union Pacific led nearly all components lower.
"The Dow transports has broken down. It's made a series of five tops (and) failed to make a new high in March. It's broken down in an equivalency basis to October lows, where it tested a major level of support," Chaikin said.
BTIG's Stockton noted that the index has underperformed since March 17 and has "come down to significant support levels" that indicate a "long-term uptrend."