- Special Counsel Robert Mueller impaneled a grand jury in his investigation into Russia's involvement in the U.S. election, the Wall Street Journal reported minutes before the close.
- Stocks slipped on the news, with the S&P 500 and the Nasdaq composite hitting session lows, before cutting some losses.
- Wall Street will now look ahead to Friday's jobs report.
U.S. stocks whipsawed on Thursday on the back of a report that the Russia investigation is intensifying.
Special Counsel Robert Mueller impaneled a grand jury in his investigation into Russia's involvement in the U.S. election, the Wall Street Journal reported minutes before the close.
The Dow Jones industrial average dipped lower on the report before closing 9.86 points higher at 22,026.10. The index also posted its seventh straight record close.
"At the least it puts the Trump administration in a legislative straight jacket. It's going to be very difficult to get laws passed while the constant drip of this news continues in the newspapers every day. I think it sets it back personally," said Jack Ablin, CIO of BMO Private Bank.
"I think the market has already adjusted. I kind of viewed tax reform as a call option that it really wasn't priced in if we get it great. I think the market as we can see survives and thrives without the benefit of pro-business policies," Ablin said.
The and the Nasdaq composite fell to session lows on the report, but managed to cut some of those losses before the close. The S&P closed 0.22 percent lower at 2,472.16, with energy leading decliners. The Nasdaq finished the session 0.35 percent lower at 6,340.34.
"That's just a piece of news that I saw here that I think shook the market here by [a few] points," said John Caruso, senior market strategist at RJO Futures. "It's just a quiet day. Really much a do about nothing. I think the markets are just waiting for the [jobs] numbers tomorrow."
The Dow was coming off a record-setting session, having broken above 22,000 for the first time on Wednesday, propelled by strong earnings from Apple. The tech giant posted better-than-expected quarterly results across the board.
"After the markets reach such a big milestone, it's typical to see what is known as technical consolidation," said Randy Frederick, vice president of trading and derivatives at Charles Schwab. Consolidation is generally thought of as a condition where prices settle at a particular level without much movement.
"I would not be surprised if we saw some sideways motion ahead of the jobs report tomorrow, with markets flat or even slightly down," Frederick said.
Overall, calendar second-quarter earnings have been strong, with most major companies reporting better-than-expected results. Among them, electric car maker Tesla reported a smaller-than-expected loss Wednesday, sending the stock surging as much as 6 percent in premarket trade.
Allergan, Global Payments, and Kellogg also posted quarterly results before the bell Thursday. Heinz, Motorola Solutions, Viacom and Western Union will report after the bell.
Wall Street also set its sights on U.S. economic data. U.S. jobless claims totaled 240,000 versus expectations of 242,000 accord to the Labor Department's Thursday report.
Looking ahead to Friday, investors may be taking a break ahead of the Bureau of Labor Statistics' its monthly employment report. Analysts expect the U.S. economy will have added 185,000 jobs in July.
"We're all anxious to see the jobs number because it's directly tied to what the [Federal Reserve] is going to do," said Jim Davis, regional investment manager for The Private Client Group of U.S. Bank. The Fed has hinted it wants to start unwinding its massive $4.5 trillion portfolio before year's end as it normalizes monetary policy.
Investors will also zero in on the report's wage-growth component. However, don't expect any major pick-ups in wage growth, said Andrew Chamberlain, chief economist at Glassdoor.
"I keep waiting for wage growth to jump because we're seeing tightening in the labor market by almost every single measure, but for some reason ... that hasn't happened yet," he said, adding that wage growth has declined for six straight months.
Meanwhile, the IHS Markit Services PMI Index hit 54.7 in July, slightly higher than in June. But the ISM nonmanufacturing index showed growth in the services sector slowed last month.
U.S. equities markets have been on a tear this year, notching record highs across the board. But Mark Newton, managing member at Newton Advisors, points out that the S&P has been in a tight range since late July.
"Overall, it's still a very range-bound and choppy US Market as recent gains seem to have stalled out once again," said Newton. There's "no end to this choppy range in sight just yet."
Newton also notes that the S&P will have to break below 2,457 or above 2,480 to get out of its tight range.
—CNBC's Patti Domm and Evelyn Cheng contributed to this report.