The S&P 500 and Dow Jones industrial average closed about 2 percent below their 52-week intraday highs, while the Nasdaq composite was more than 6 percent below its 52-week intraday high.
Katie Stockton, chief technical strategist at BTIG, said in a morning note that S&P futures were in short-term overbought territory.
Read MoreJim Paulsen makes case for why stocks are about to hit record highs
"Overbought conditions can likely be sustained for 3-4 days before giving way to a pullback, but this would not be enough time for a breakout from the long-term downtrend channel to be confirmed," she said. "We are watching for the VIX to push out of its trading range as an indication of increased downside volatility for equities."
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded lower near 13.8.
All three major averages gave up opening gains to hold around the flatline in afternoon trade. The Nasdaq composite outperformed, boosted by a near 1 percent gain in Apple, as well as strong gains in Dollar Tree.
The S&P 500 declined less than a point, with materials leading decliners.
"Some would say [we're] treading water," said Kim Forrest, senior equity analyst at Fort Pitt Capital. "On the 'good-news-is-bad news' front, we got some decent data that make a Fed rate hike seem more likely."
Read MoreDollar stores boosted after beating Street
"On the 'good-news-is-good news' front, oil prices are going up," she said. " You take those two together and you go nowhere."
The Dow Jones industrial average closed about 25 points lower, as Goldman Sachs had the greatest negative impact on the blue chips index.
"I think the market ... is pausing to digest Tuesday's and Wednesday's rally," said Adam Sarhan, CEO of Sarhan Capital.
U.S. stocks posted sharp gains on Tuesday and Wednesday, with the Dow rising triple digits on both sessions.
Read MoreApple executive proposed bid for Time Warner
The U.S. dollar index pared earlier losses to trade about 0.2 percent. Commodity-related currencies were stronger against the dollar. The euro was near $1.119 and the yen traded near 109.7 yen against the greenback as of 4:03 p.m. ET.
U.S. stock index futures held slightly higher after early morning data reports.
Durable goods orders jumped 3.4 percent last month, the Commerce Department said. However, non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 0.8 percent for a third-straight month after an upwardly revised 0.1 percent drop the prior month.
Initial jobless claims fell to a seasonally adjusted 268,000 for the week ended May 21.
Pending home sales rose 5.1 percent in April from the previous month to hit their highest level in a decade.
Federal Reserve Governor Jerome Powell, a voting member, said in a speech that an interest rate hike could be appropriate fairly soon, adding that he supports gradual hikes if data underpin forecasts of an improving economy.
Read MoreStocks aim at new highs, but correction worries bubble
Treasury yields held lower, with the 2-year yield around 0.88 percent and the 10-year yield around 1.83 percent.
The Treasury held a seven-year note auction, which saw strong demand.
St. Louis Federal Reserve President James Bullard said Thursday in a speech in Singapore that U.S. labor markets are relatively tight and may put upward pressure on inflation.
He noted while market-based forecasts of Fed policy see "almost no normalization," the committee expects "data-dependent 'slow-normalization.'"
Read More This is why Trump will be unambiguously pro-energy