U.S. equities pared gains and closed mostly lower on Thursday despite concerns over China having been largely subsided while investors digested a number of economic data points. (Tweet This)
"We're still trading in this sort of range," said JJ Kinahan, chief strategist at TD Ameritrade. "Yesterday was such an amazing rally that it's hard to believe we come out of it unscathed."
U.S. stocks gave back most of their gains less than an hour ahead of the close after trading in a back-and-forth range throughout the morning despite a massive fall in oil prices. The Dow rose about 80 points at its peak, while the S&P 500 and the Nasdaq Composite rose about 7 points and 27 at their respective highs.
U.S. crude traded below $42 per barrel for the first time since March 2009, leading the energy sector to trade as low as 1.35 percent. WTI futures settled down 2.5 percent.
"The negative effect of falling oil prices on stocks maybe has faded," said Zachary Karabell, head of global strategy at Envestnet.
Subdued concerns over China devaluing its currency by 10 percent propped U.S. markets higher, said William Lynch, director of investments at Hinsdale Associates. "I think that's in the rear-view mirror now," he said.
"The last thing they want is spiraling devaluation, but at the same time they are standing by their word," PBoC vice governor Yi Gang said.
On Wednesday, U.S. equities whipsawed, dropping more than 1 percent at their lows before closing mostly higher. Stocks were largely weighed down by the People's Bank of China's decision to further weaken the yuan against the U.S. dollar.
Investors also digested a slew of economic data, as U.S. retail sales for July rose 0.6 percent, slightly above estimates, the Commerce Department said, boosted by auto sales. June's retail sales were also revised up to show them unchanged instead of the previously reported 0.3 percent drop, Reuters said.
"When you take out auto sales, it really wasn't [an increase]," said Maris Ogg, president at Tower Bridge Advisors. "We've had money coming into our pockets due to [lower] gasoline prices and we haven't spent it."
Ogg added the U.S. consumer has become more prudent since the recession and is only buying what he or she truly needs.
Weekly jobless claims came in at 274,000, slightly above a consensus estimate of 270,000, while import prices fell 0.9 percent amid lower oil costs and a strong dollar.