Oil futures seesawed Wednesday, with U.S. crude 2.48 percent lower, at $41.71 lower after the Energy Information Administration's weekly inventories data release. The data showed U.S. commercial crude inventories rose by 1.1 million barrels to a total of 523.6 million last week. Analysts expected the EIA to cite a drawdown of about 1 million barrels each in both domestic crude and gasoline inventories.
David Kelly, chief global strategist at JPMorgan Funds. said a build in inventories may pressure oil prices, but the knock-on effect on equities should not be small. "The world is awash in oil, but it's not because the economy is faltering," he said.
Before the bell, Michael Kors posted quarterly results that beat expectations on both lines, but the stock was down 2.5 percent. Meanwhile, Ralph Lauren shares popped more than 9 percent after its earnings came in sharply above expectations.
"The one think that we've found with the consumer ... is people have really over-estimated the impact of lower energy prices for the consumer," said Nick Raich, CEO of The Earnings Scout.
Kohl's, Macy's and Nordstrom are scheduled to post results on Thursday.
U.S. stocks have traded in a tight range recently, while the CBOE Volatility index (VIX), widely considered the best gauge of fear in the market, has held near one-year lows. On Wednesday, the Vix traded 7 percent higher, near 12.5.
"Barring a shock, I think the market is going to be pretty quiet over the next few weeks," JPMorgan's Kelly said.
"I think we'll be relatively flat for a while for two reasons. First, Earnings season is mostly over, and that created positive support for stocks. Second, economic news ... is expected to be mixed," said Kate Warne, investment strategist at Edward Jones. "Overall, we're looking at a flat market for a while as investors reassess [the recent rally]."
That said, the S&P and the Nasdaq notched all-time intraday highs Tuesday.
"Stretched valuations have made it difficult for value managers to put money to work. The economic data remains mixed as evidenced by yesterday's lousy Productivity report," Jeremy Klein, chief market strategist at FBN Securities, said in a Wednesday note to clients.
"The bulls have had their way with the bears after the broader indices bottomed in the immediate aftermath of United Kingdom's referendum pertaining to its status within the European Union. Although a significant amount of long term uncertainty surrounds Brexit, the fears associated with the shocking result on June 23 seems comical in hindsight," Klein said.
On the data front, the Job Openings and Labor Turnover Summary (JOLTS) report showed an increase to 5.624 million job openings in June.
U.S. Treasurys advanced, with the two-year note yield falling to about 0.7 percent, while the benchmark 10-year yield held around 1.51 percent. The Treasury Department sold $23 billion worth of 10-year notes at a high yield of 1.503. The auction saw weak demand.
The dollar fell against a basket of currencies, with the euro rising to $1.117 and the yen falling to 101.3.
Overseas, European equities traded slightly lower, with the Stoxx 600 index slipping 0.2 percent. In Asia, the Shanghai composite fell 0.23 percent, while the Nikkei 2225 dropped 0.18 percent.