U.S. stocks closed lower Thursday as investors awaited a post-close speech from Fed Chair Janet Yellen. ( Tweet This )
The major averages more than halved losses in afternoon trade. Oil turned higher, helping stocks shake off pressure from declines in global markets overnight. Utilities and energy led S&P 500 sector advancers.
"Crude was pretty strong on this one. We've broken through some pretty strong resistance on the SPX," said JJ Kinahan, chief strategist at TD Ameritrade. "There was more support near 1,910, which coincides with 1,900 in the futures."
"We really haven't had a great reason to sell off in the last two days because besides the durable goods numbers we haven't had much news," he said. "I think it's going to be very difficult for stocks to hold their heads up here because of some of the nervousness ahead of the Fed."
Analysts also attributed the recovery attempt to some short-covering ahead of Yellen's 5 p.m., ET, speech, which could provide clarity on the Fed decision last week.
The Dow Jones industrial average closed about 79 points lower after falling as much as 263.53 points. Caterpillar was the greatest weight on the index, closing nearly 6.3 percent lower on news the firm will cut up to 5,000 jobs by the end of 2016 and lowered guidance.
The Nasdaq composite more than halved losses but failed to hold gains for 2015, joining the other major averages in negative territory year-to-date.
"After being down five out of six days, I think you see some bargain hunters come in," said Paul Nolte, portfolio manager at Kingsview Asset Management. "The volume numbers are still pretty weak. You can't say we may be done with the selling either. Valuations are still on the high side."
The Dow remained more than 10 percent away from its 52-week high, in correction territory. The Nasdaq and S&P briefly joined the Dow in correction mode but closed out of it. The indexes are on track for a weekly loss of more than 1 percent.
"If we want to go back to fair value we may have more digging to do," said Jack Ablin, chief investment officer at BMO Private Bank. "If we can start to see revenue growth that can patch over a lot of problems. Right now the data coming through is not supporting those expectations."
"I think it's a simple mismatch of reality and expectations, and that's what corrections are made of," he said. "I don't see a bear market. We just need a reset."
The number of new 52-week lows in the S&P 500 was the most since Aug. 21, the Friday before the "Flash Crash" of Aug. 24.
Fed Chair Janet Yellen is scheduled to speak on inflation and monetary policy at a 5 p.m., ET, speech at the University of Massachusetts, where the audience will not be able to ask questions.
"I don't think there's going to be much ahead of that," said Peter Boockvar, chief market analyst at The Lindsey Group. "We heard from Yellen for an hour last week after (the Fed) statement. I'm sure she's going to be a focus but I'm not sure there's much else she's going to say."
"It's all about Yellen today," said Peter Cardillo, chief market economist at Rockwell Global Capital. She could "be more hawkish. ... Maybe she might indicate that interest rates are going up this year."
He's watching to see if the S&P 500 can hold 1,900 and indicate a bottom.