U.S. stocks closed down more than 1 percent on the last day of trade for April as investors weighed mixed economic data and continued weakness in the dollar.
The major indices closed below their 50-day moving averages. (Tweet This)
The Nasdaq closed down 82.22 points, or 1.64 percent, at 4,941.42, recovering slightly from a 2 percent dip. Biotechs weighed on the index, with the iShares Nasdaq Biotechnology ETF (IBB) ending more than 3 percent lower.
The Dow Jones Industrial Average closed down 195.01 points, or 1.08 percent, at 17,840.52, with Apple down 2.7 percent as the greatest laggard. American Express, Wal-Mart and Coca-Cola were the only blue chips advancers.
The blue chip index clung to gains of 0.10 percent for 2015. Earlier, the index lost more than 250 points to temporarily wipe out gains for the year.
The closed down 21.34 points, or 1.01 percent, at 2,085.51, with information technology leading all 10 sectors lower.
"Yesterday's weak earnings and today's light unemployment figure have got the market worried that the Fed's going to raise rates and the underlying economy is not as strong as everyone had hoped," said Kim Forrest, senior equity analyst at Fort Pitt Capital.
Wednesday's weaker-than-expected first-quarter GDP report and Fed meeting statement that removed all calendar references to a rate hike also put investors on edge ahead of a key economic indicator—April's jobs report due next Friday. The data could indicate a pickup in the second quarter and bring a rate hike sooner rather than later.
"We haven't seen yet a whole lot of evidence of things really turning around in April," said Bill Stone, chief investment strategist at PNC Asset Management. He still expects low- to mid- single-digit growth for 2015.
On Thursday, weekly jobless claims came in at 262,000, a 15-year low. U.S. personal income was flat in March, and consumer spending up just 0.3 percent when adjusted for inflation.
April's Chicago Purchasing Managers' Index (PMI) read was 52.3, topping expectations.
"Overall the data has been much weaker. It is still way too early to say you're going to see spectacular growth in the second quarter," said Krishna Memani, CIO of Oppenheimer Funds. "Clearly the bond market is not helping but the bond market is not the primary driver of equities."
Longer-dated U.S. Treasury yields held near highs as European bond yields climbed.
Earlier, U.S. stocks briefly halved losses as investors found some relief from news of progress towards a deal on Greece. An International Monetary Fund spokesman said the fund does not expect the country to exit the euro zone.
Meanwhile, Greece's government signaled the biggest concessions so far as crunch talks with lenders on a cash-for-reforms package started in earnest, while trying to assure leftist supporters it had not abandoned its anti-austerity principles.
The Athens stock exchange closed up 3 percent, with most European equities ending mildly higher.
The market was "at a recovery" from morning lows, said Tim Courtney, CIO at Exencial Wealth Advisors. "Part of it is what's coming out of Greece. What I think is moving the market today and last week is, where the good news is going to come from."
Corporate results have tended to beat estimates on earnings per share but miss on revenue.
Rising rates and lowered earnings expectations for stocks trading at high multiples makes the market "vulnerable," said Bruce Bittles, chief investment strategist at RW Baird.
Analysts noted Thursday's decline did not not indicate a significant selloff as the major indices came off high levels and traders took profits on the last day of trading for the month.
"It's nothing more than a normal, modest correction," said Paul Nolte, portfolio manager at Kingsview Asset Management. "Volume hasn't picked up."
"You need a clear reporting of earnings (at these multiples) that propels stocks higher," said Art Hogan, chief market strategist at Wunderlich Securities, noting that the U.S. dollar remained in focus.
The U.S dollar held lower against major world currencies after the euro traded above $1.12 for the first time in two months on Wednesday.
"Certainly the change in the direction of the dollar has caused a lot of anxiousness," Bittles said.
"I think the biggest meaning in the euro being strong is (ECB President Mario) Draghi's plan isn't working," said Marc Chaikin, CEO of Chaikin Analytics. "It's a negative for the U.S. economy as well because it takes off the table the whole notion of global expansion."
But some currency strategists say the euro's strength may be temporary.
German bund yields surged on Thursday, following a strong rally on Wednesday. U.S. Treasury yields also continued to trade higher, with the benchmark 10-year note yield hitting 2.10 percent on Thursday.
Investors also attempted to interpret Wednesday's Fed statement which removed all calendar references on the timing of a rate hike. Officials have indicated a desire to raise rates at some point this year, with the market now anticipating an increase possibly in September.
The markets "seem to be concerned about when that may take place," said Ryan Larson, head of U.S. equity trading at RBC Global Asset Management (U.S.). "The data has been good enough to confirm that we continue to improve but not enough for the Fed to move aggressively."
On Wednesday, official data showed gross domestic product in the U.S. expanded at an only 0.2 percent annual rate, on Wednesday. That was a big step down from the fourth quarter's 2.2 percent pace and marked the weakest reading in a year.
Exxon Mobil posted first-quarter earnings that declined sharply from a year ago but handily beat expectations on both the top and bottom lines.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 14.
About three stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 1.0 billion and a composite volume of 4.4 billion in the close.
Crude oil futures settled up 1.79 percent at $59.63 a barrel on the New York Mercantile Exchange. Gold futures settled down $27.60 at $1,182.40 an ounce.
—Reuters contributed to this report.
On tap this week:
Earnings: Chevron, CVS Health, Aon, Calpine, Clorox, Moody's, Newell Rubbermaid, Duke Energy, Weyerhaeuser, TransCanada, VF Corp, Madison Square Garden, Legg Mason, CBOE
8:30 a.m.: Cleveland Fed President Loretta Mester
9:45 a.m.: Manufacturing PMI
10 a.m.: ISM manufacturing, construction spending, consumer sentiment
3:45 p.m.: San Francisco Fed President John Williams
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