U.S. stocks closed mildly lower Wednesday in light volume trade as investors eyed oil and commodity prices, amid weak manufacturing China data. (Tweet This)
"We've been bouncing around all day. We've been going up and down with energy prices," said Art Hogan, chief market strategist at Wunderlich Securities. "Our mid-term and longer-term concerns aren't going to be answered for a while."
Crude traded more than 3 percent lower in the afternoon despite initially spiking on a report that U.S. crude inventories fell by 1.9 million barrels. Crude settled down $1.88, or 4.06 percent, at $44.48 a barrel.
Trade volume was the ninth lowest for the year.
"I don't think today's important. I think the market's pausing. It's digesting its breadth. That's healthy," said Adam Sarhan, CEO of Sarhan Capital.
The Dow Jones industrial average closed about 50 points lower after falling as much as 118.49 points. The index remained in correction territory, trading more than 11 percent away from its 52-week high. The S&P 500 and Nasdaq composite were about 9 percent below their 52-week highs.
"Typically the market is weak and you look at the news out of Europe and Asia and it's weak," said Bruce Bittles, chief investment strategist at RW Baird. "The correction in the stock market really hasn't resolved the valuation problem we had coming into the year."
"You're in this testing phase. The work has not been done on the downside yet," he said.
The Nasdaq held mildly higher for 2015. Both the Dow and S&P are negative for the year so far.
"We're just bouncing around here. We've got no certainty from the Fed. We're starting to get pre-announcements. We've got the beginning of pre-tax selling," said Maris Ogg, president of Tower Bridge Advisors.
Investor focus remains on the Federal Reserve and concerns about slowing growth in China.
"When you have your two big drivers in a vacuum (of major news), you have markets clinging to commodities and that's what's happening now," Hogan said.
Copper gave up gains to trade mildly lower, extending Tuesday's sharp declines on analyst downgrades and concerns about slowdown in China.
The preliminary China manufacturing purchasing managers' index (PMI) fell to a six-and-a-half-year low of 47.0 in September, below a 47.5 forecast by analysts in a Reuters poll.
"I thought there'd be more of a negative reaction to the Caixin manufacturing because of the concern is the effect of a global slowdown on the U.S.," said Ben Pace, chief investment officer at HPM Partners .
Earlier, stock index futures pared gains to dip into negative territory as crude briefly turned negative in early trade.
"It looks like (oil) is going to have difficulty holding these levels with news out of China (that) should continue to pressure the oil space," Pace said.
Asian shares fell deeper into negative territory following the PMI report, with the benchmark Shanghai Composite stock index closing more than 2 percent lower. Japanese markets were closed for a holiday.
European markets reversed early declines but gave up gains to close mildly higher, with the DAX up less than half a percent.
Volkswagen recovered from a recent plunge of more than 30 percent to hold more than 5 percent higher in the close.
Martin Winterkorn resigned as the firm's CEO Wednesday. Last week, news emerged that the automaker had misled authorities over the emissions of its diesel cars.
"Just kind of a light news day. (Tuesday we had) Europe, Volkswagen, pressure on commodities and oil. That's kind of alleviated, keeping us floating around today," said Peter Coleman, head of trading at Convergex. He noted volume was light given the Yom Kippur holiday.
Investors also eyed Fed speakers for clarity on the central bank's decision last week to keep rates unchanged amid concerns about global growth.
Atlanta Fed President Dennis Lockhart reiterated in remarks Wednesday that a 2015 rate hike is still likely, Dow Jones reported.
Fed Chair Janet Yellen is scheduled to speak Thursday.
"Gone is the confidence in the Fed put. Now the increased uncertainty has made the markets more vulnerable," said Eric Wiegand, senior portfolio manager at the private client reserve at U.S. Bank.
"There are a lot of data points that may be unsettling and we may be in a more volatile environment until we get some clarity," he said.
Growth in the U.S. manufacturing sector showed no month-over-month change during September, staying at August's sluggish pace of 53, which was the weakest in almost two years, according to Markit's preliminary U.S. maufacturing PMI for September.
U.S. Treasury yields held higher, with the 10-year yield at 2.15 percent and the at 0.69 percent.
The U.S. dollar traded a touch lower against major world currencies, with the euro higher near $1.11 and the yen around 120 yen against the dollar.
European Central Bank President Mario Draghi said in a Wednesday speech to the European Union Parliament that inflation is increasing more slowly than expected but should still rise towards the end of the year. He added more risks to euro zone growth outlook have emerged, but more time was needed to determine whether or not more monetary stimulus was in order.
At the beginning of a visit to the United States this week, Chinese President Xi Jinping said Tuesday that China's financial markets will remain stable. Xi also said Beijing is ready to co-operate with Washington on fighting cyber crimes.
Xi added Wednesday that his country was fully for a long time to come.
Read More Read MoreChina's Xi defends economy, markets at US address
"He's trying to calm U.S. investors on his trip here to the U.S. and trying to let people know that things may not be as bad as they are portrayed," said Chris Gaffney, president of world markets at EverBank.
Stocks plunged more than 1 percent Tuesday, weighed by sharp declines in commodities on continued concerns of slowing growth.
"The SPX appears to have broken down from its triangle formation despite having closed above 1,940 support yesterday," BTIG Chief Technical Strategist Katie Stockton said in a note. "We are concerned by the gaps down in the NASDAQ Composite Index, as well as small- and mid-cap benchmarks, as potentially indicative of a deeper pullback and retest of August's lows. Down volume has been on the rise, and short-term momentum has deteriorated."
Steelcase and Worthington are scheduled to report earnings after the close.
The closed down 3.98 points, or 0.20 percent, at 1,938.76, with materials leading six sectors lower and utilities leading gainers.
The Nasdaq closed down 3.98 points, or 0.08 percent, at 4,752.74.
The CBOE Volatility Index (.VIX), widely considered the best gauge of fear in the index, traded near 22.
About three stocks declined for every two advancers on the New York Stock Exchange, with an exchange volume of 780 million and a composite volume of nearly 3.2 billion in the close.
Gold settled up $6.70 at $1,131.60 an ounce.
On tap this week:
Earnings: Steelcase, Worthington Industries
Earnings: KB Home, Nike, Accenture, Bed Bath & Beyond, Pier 1 Imports, Jabil Circuit
8:30 a.m.: Initial claims
8:30 a.m.: Durable goods
10:00 a.m.: New home sales
5:00 p.m.: Fed Chair Janet Yellen on inflation/policy at University of Massachusetts
8:30 a.m.: Real GDP Q2 (third)
9:15 a.m.: St. Louis Fed's Bullard
1:25 p.m.: Kansas City Fed President Esther George
More From CNBC.com: