Earlier in the session, energy stocks had popped more than 1 percent, boosted by even more sharp gains in oil, before closing about 0.3 percent. West Texas Intermediate futures for January delivery rose 3.28 percent to settle at $51.06 per barrel, a day after spiking more than 9 percent. On Wednesday, OPEC and Russia agreed to restrict production, even as analysts warned other producers were likely to top up supply.
Jeremy Klein, chief market strategist at FBN Securities, said in a note that he expects crude to trade above $60 by next summer. " I reiterate that the fundamental story surrounding the commodity will flip from one fraught with supply concerns to one optimistic about burgeoning global demand," he said.
The Dow and S&P both hit record highs Wednesday before pulling back, buoyed by a sharp rise in energy stock prices. Wednesday was also the last trading day of November, a month which saw the major indexes soaring into record highs after President-elect Donald Trump stunned the world with his U.S. election win.
"While I think the fundamentals continue to improve, ... the rally has been pretty dramatic," said Randy Frederick, vice president of trading and derivatives at Charles Schwab. "I think we're seeing signs of the market topping out a bit."
"The market's rise, while it may continue for a bit, might be flattening out and the upside will be far more limited than what we've seen," he said.
In economic news, The IHS Markit U.S. Manufacturing index reading for November came in at 54.1. "This was mainly driven by domestic sales, as new orders from abroad increased only marginally since the previous month, with survey respondents citing competitive pressures and the strong dollar," IHS Markit said.
The ISM manufacturing index came in at 53.2 for November, while construction spending rising 0.5 percent for October. Before the bell, initial jobless claims came in at 268,000, above an expected 253,000. Thursday's litany of data will build up towards Friday's November jobs report.
"We have the jobs report due tomorrow, but I think people are trying to figure out what to do with it. Everything is baked in," said JJ Kinahan, chief market strategist at TD Ameritrade.
Market watchers have paying close attention to U.S. economic data, as a Federal Reserve rate increase on Dec. 14 becomes more likely. According to the CME Group's FedWatch tool, market expectations for a rate hike are about 99 percent.
"I can't see them surprising the market be not raising rates because of the Fed funds futures and because of they're credibility," said Kinahan. "They came into the year saying four rate hikes; we're looking at one."
U.S. Treasury yields rose Thursday, with the benchmark 10-year note yield at 2.4417 percent and the two-year note yield around 1.147 percent. The U.S. dollar slipped 0.5 percent against a basket of currencies, with the euro near $1.066 and the yen around 113.9.
In corporate news, Land's End and Dollar General both reported quarterly results before the bell. Meanwhile, Clarcor is being bought by Parker Hannifin for $4.3 billion in cash and assumed debt, or $83 per share.