U.S. stocks closed lower on Thursday as a deluge of mostly lackluster earnings pressured the major averages. (Tweet This)
"I think in general the earnings have been mixed. We started pretty good and then in the last few days some of the tech companies have surprised the market," said Mark Luschini, chief investment strategist at Janney Montgomery Scott. "The last couple days have been sort of mixed and that's weighing on investors minds."
Stocks trimmed losses in the close. The Dow Jones industrial average ended about 119 points lower, off an early 146-point decline. The blue-chip index closed about half a percent lower for 2015, as Caterpillar and 3M each fell more than 3.5 percent. The Dow has closed in the red for the year exactly half the time so far.
The S&P 500 and Nasdaq Composite also turned lower after initially trying for gains, with Google off nearly 3 percent and Amazon ending lower by 1.25 percent ahead of its earnings release after the close.
"I think there's been an expectation that the estimates were brought down so markedly that they'd be easy to beat," said Quincy Krosby, market strategist at Prudential Financial.
"When you have the estimates brought down so much you can't disappoint (or else) the market will punish you," she said.
Caterpillar closed down 3.6 percent at a multi-year low after reporting earnings per share that matched estimates, but revenue that missed. The firm also cut its revenue forecast for the year. The heavy equipment maker cited currency impact and a soft economic environment, but said it is controlling costs and will be in position to take advantage of improving conditions when they occur.
Earlier, the company's shares declined more than 3 percent in pre-market trade, weighing on the Dow futures.
General Motors closed up about 4 percent after posting record North American profit and forecast that the second half of the year will be stronger than the first. The automaker reported earnings per share that beat by 21 cents, but revenue that missed sharply, mostly due to currency headwinds.
3M ended down 3.8 percent, off an earlier loss of about 4 percent. The firm reported revenue that missed expectations and earnings per share that beat by 2 cents. 3M noted a mixed economic environment, but said it was able to expand profit margins.
American Express closed 2.5 percent lower. The financial firm reported after the close Wednesday that it earned $1.42 per share, 10 cents above estimates. Revenue missed expectations, but the company benefited from job cuts and other cost savings.
"You've got some big companies that are going to move things around—CAT, GM, 3M," said Dan Veru, chief investment officer at Palisade Capital Management. "In the short-run the major indices are going to struggle to make progress."
Under Armour ended up 7.3 percent after briefly jumping nearly 9 percent to an all-time high on earnings that beat on both the top and bottom line. The athletic apparel brand saw strong demand for both its Stephen Curry-branded shoes and its training apparel.
McDonald's closed half a percent lower. The fast-food chain posted quarterly adjusted earnings of $1.26 a share, topping estimates, while revenue was slightly higher than estimates. However, global comps declined.
"The financials had good beat rates. ... It's more of the metals companies that have been a disappointment. Healthcare firms have seen topline growth," said Nick Raich, CEO of The Earnings Scout. "Anybody expecting a sharp bounceback in the second-quarter activity is not getting them in the second quarter. It's going to be very difficult to get out of this range without strengthening topline sales."
Only about half of firms reporting so far have beat on revenue, while about three-fourths have topped earnings-per-share estimates, Raich said.
However, second-quarter softness doesn't diminish the outlook for the rest of the year, some analysts say.
"I think the delta to the earnings for the second-half of the year is to the upside," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.
He expects the S&P 500 to post 7 to 9 percent in gains for the year, with 5 percent coming from earnings and 2 percent from dividend income.
In other corporate news, U.S. health insurer Anthem is planning to announce an acquisition deal for Cigna at $188 a share on Friday, sources told CNBC. Shares of Cigna briefly jumped more than 2.5 percent.
In economic news, weekly jobless claims came in at 255,000, their lowest level since 1973.
While analysts said the low figure may keep a rate hike on the table for this year, they were cautious about reading too much into a figure that may be exaggerated by seasonal production changes.
"Bottom line, notwithstanding the noise over the past few weeks in the data, the level of firing's remain benign," Peter Boockvar, chief market analyst at The Lindsey Group, said in a note. "The demand for labor is good and it's why employers are holding on to what they've got. It is the lackluster supply of labor that is inhibiting faster job growth."
The June leading economic indicator index came in at 123.6, a gain of 0.6 percent.
The dollar gave back initial gains from the jobs report to trade about half a percent lower, but the euro continued to hold just bellow $1.10 after falling their on the weekly claims.
Brandon Swensen, co-head of U.S. fixed income at RBC Global Asset Management, expects the Federal Reserve to hike rates once this year.
"We have seen some globally oriented bellwethers like 3M and Caterpillar issue cautious outlooks. This raises uncertainty about the outlook for global growth. It would be hard for the Fed to be very aggressive in the face of slowing global growth in our view," he said.
The 10-year Treasury note yield fell to 2.27 percent and the 30-year traded below 3 percent.
Crude oil settled down 74 cents, or 1.5 percent at $48.45 a barrel, its lowest settlement since March 31. Gold ended 0.2 percent higher at $1,094.10 an ounce, breaking a 10-day losing streak.
"We're kind of in wait-and-see mode until the Fed meets next week," John Caruso, senior market strategist at RJO Futures, said of the movements in commodities.
The closed down 12 points, or 0.57 percent, at 2,102.15, with utilities and materials leading all 10 sectors lower.
The Nasdaq closed down 25.36 points, or 0.49 percent, at 5,146.41.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 13.
About seven stocks declined for every three advancers on the New York Stock Exchange, with an exchange volume of 858 million and a composite volume of nearly 3.8 billion in the close.
—CNBC's Peter Schacknow contributed to this report.
On tap this week:
Earnings: Amazon.com, Starbucks, Visa, Capital One, Stryker, Pandora, Flextronics, Ruby Tuesday
10:00 a.m. Leading Indicators
Earnings: Biogen, Johnson Controls, State Street, Xerox, Moody's, Cabot Oil and Gas, Spirit Airlines
9:00 a.m. Markit Manufacturing PMI
10:00 a.m. New home sales
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