U.S. stocks closed narrowly mixed Thursday as oil failed to hold much of its intraday gains and investors awaited the key employment report due Friday. (Tweet This)
"I think largely it's a combination of both some investors pulling money off the table going into tomorrow's number and certainly the oil market pulling off, that's a big factor," said John Caruso, senior market strategist at RJO Futures. He also noted some pressure from the strong dollar.
U.S. crude oil futures settled up 54 cents, or 1.2 percent, at $44.32 a barrel. Earlier, crude traded more than 4 percent higher to top $46 and hit its highest since Monday. Initial gains were supported by concerns of a near-term supply shortage due to a huge wildfire near Canada's oil sands and escalating tensions in Libya.
"At the very beginning ... that was one hundred percent correlation with the Alberta wildfires and then it kind of got looser in terms of the increase," said Luana Siegfried, energy research associate at Raymond James. She attributed some of the afternoon decline to profit-taking.
Other traders attributed oil's pullback to a Genscape report of a 1.35 million-barrel stockpile build at the Cushing, Oklahoma delivery hub for U.S. crude futures during the week to May 3.
"Later in the day Genscape came out and said there was this big build in Cushing," said John Kilduff, founding partner at Again Capital. "The reality is the tar sand fields are a ways from where the fire is so it's not that big a deal. The Libya thing, too, is not that big a deal."
The S&P 500 closed about half a point lower with consumer discretionary leading declines. Energy led advancers but ended up 0.74 percent, off highs. The Dow Jones industrial average squeezed out a 9-point gain with IBM having the most positive impact.
"You kind of need a little growth here to kick in to get this market going up," Jeremy Klein, chief market strategist at FBN Securities, said, noting investors were mostly waiting for the jobs data.
"Everything to me is a bunch of noise," he sad.
Adam Sarhan, CEO of Sarhan Capital, earlier said the initial gains in stocks were "a little bit of a relief rally" with sentiment supported by gains in oil.
"Today's an important day because if the market pulls off today hard it will tell you buyers are getting exhausted," he said.
The Dow transports closed more than 1 percent lower as Matson fell 12.5 percent to lead decliners.
"An oversold bounce is likely to interrupt the pullback in the SPX today, but we think it will fade on weak short-term momentum," BTIG Chief Technical Strategist Katie Stockton said in a morning note.
"Signs of short-term downside exhaustion have arisen in the technology sector and European equity benchmarks, supporting a few days of stabilization in those areas," she said. "However, broad-based indices like the SPX are still a couple of days away from flashing short-term oversold 'buy' signals."
In economic news, weekly jobless claims rose to 274,000. Earlier, Challenger, Gray & Christmas reported layoffs by U.S.-based companies accelerated in April, sending year-to-date job cuts to the highest level since 2009.
"Nothing too jaw-dropping today," Brian Fenske, head of sales trading at ITG, said, noting "conviction levels appear relatively low."
The U.S. dollar index rose for a third-straight day with gains of more than half a percent. The euro struggled to hold $1.14 and the yen was last near 107.26 yen against the greenback.
The 2-year yield hit 0.718 percent and 10-year Treasury yield fell to 1.735 percent, both their lowest in more than 2 weeks.
The major economic data for the week, the nonfarm payrolls report for April, is due Friday ahead of the U.S. market open.
St. Louis Fed President James Bullard said he is undecided on the path forward for U.S. interest rates. He added that global headwinds that have partly prevented the U.S. central bank from raising rates again may have dissipated.
San Francisco Fed President John Williams said on CNBC's "Power Lunch" that two or three rate hikes this year is "reasonable," but the Fed will continue to watch economic data. He is not a voting member of the FOMC this year.
Atlanta Fed President Dennis Lockhart said on CNBC's "Closing Bell" that he is "on the fence" on the possibility of a June rate hike, while optimistic the rest of the year will be much better than first-quarter U.S. growth. He added that the U.K. vote on whether or not to stay in the European Union is "a big unknown" and a consideration in U.S. policymaking.
Later in the day, Bullard, Williams, Lockhart are scheduled to join a panel at the Hoover Institution's International Monetary Stability Conference with Dallas Fed President Rob Kaplan.
European stocks were mostly higher. Asian stocks closed mostly higher, with the Shanghai composite up about 0.2 percent but the Hang Seng nearly 0.4 percent lower. Markets in Japan remained closed for a holiday.
In China, the Caixin services PMI fell in April to 51.8 from 52.2 the prior month.
The closed down 0.49 points, or 0.02 percent, at 2,050.63, with consumer discretionary leading six sectors lower and energy the top advancer.
The Nasdaq composite closed down 8.55 points, or 0.18 percent, at 4,717.09.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded lower near 15.9.
Decliners were a touch ahead of advancers on the New York Stock Exchange, with an exchange volume of 956 million and a composite volume of 3.9 billion in the close.
Gold futures for June delivery settled down $2.10 at $1,272.30 an ounce.
Disclosure: CNBC's parent NBCUniversal is a minority investor in Kensho.
On tap this week:
7:15 p.m. Atlanta Fed's Lockhart, Dallas Fed President Rob Kaplan, St. Louis Fed's Bullard, San Francisco Fed's Williams at Hoover Conference
Earnings: ArcelorMittal, Cigna, Willis Towers Watson, Madison Square Garden, Berkshire Hathaway
8:30 a.m. Employment report
1 p.m.: Oil rig count
3 p.m.: Consumer credit
*Planner subject to change.
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