Retail stocks rose sharply on Thursday after companies in the sector, some of the worst performers this year, rebounded after earnings weren't as bad as feared.
The SPDR S&P Retail exchange-traded fund (XRT) spiked 0.9 percent higher, with shares of Abercrombie & Fitch, PVH Corp., Williams-Sonoma and Perry Ellis all closing higher. Kroger's stock shaved off some of the XRT's gains, after it declined 7.7 percent on news that Amazon would instantly launch discounts for shoppers in Whole Foods the once the deal closes.
"In my opinion, all the retailers knew that Q2 was going to be better than Q1 and the market forgot," Jan Rogers Kniffen, CEO of J Rogers Kniffen WWE, told CNBC's "Squawk on the Street." "Some of these earnings numbers were pretty ugly, but they were still better than expected."
Retail stocks have taken a hit this year as investors fear further market gains from Amazon. In 2017, the XRT has shed 11.9 percent, while Amazon has jumped 27 percent. Amazon's stock fell about 1.3 percent on Thursday, however.
The broader market, meanwhile, ended slightly lower. The Dow Jones industrial average closed just 28.7 points lower at 21,783.4. The S&P 500 fell 0.2 percent to 2,438.97, with consumer staples leading decliners. The Nasdaq composite pulled back 0.1 percent to close at 6,271.33.
Investors set their sights on Jackson Hole, Wyoming as leaders of global central banks gathered for the annual Jackson Hole economic symposium. Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi are attending, and are scheduled to speak about global monetary policy on Friday.
Kansas City Fed President Esther George told CNBC on Thursday that the economy was strong enough to handle more rate hikes, despite recent readings of weak inflation.
"I think we should continue with the gradual rate path," she said from the annual symposium. "While we haven't hit 2 percent, I'm reminded that 2 percent is a target over the long term, and in the context of a growing economy, of jobs being added, I don't think it's an issue that we should be particularly concerned about unless we see something change."
While most don't anticipate any major statements on increasing interest rates, investors will be scrutinizing the bankers for any sign that could indicate a change in policy in the months to come. Market expectations for a rate hike in December are just 37.6 percent, according to the CME Group's FedWatch tool.
"Jackson Hole would have been more influential on markets if we thought Draghi or Yellen would say something pertaining to policy," said Wunderlich Securities Chief Market Strategist Art Hogan. "What may be more influential, today at least, is that the death of the U.S. consumer may have been exaggerated."
Sovereign bonds fell slightly amid the symposium. The yield on the 10-year Treasury note ticking higher to 2.189 percent. Bond yields move inversely to prices. The uptick in yields follow months of declines, with the yield on the U.S. 10-year note down about 30 basis points since January.
The euro traded slightly weaker against the dollar at $1.1799. In 2017, the euro has posted sharp gains against the dollar, rising over 12 percent.
Investors also digested tweets from President Donald Trump regarding the debt ceiling. Trump tweeted that he had asked Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan tie debt ceiling legislation to a veterans affair bill passed yesterday.
The tweets came a day after the Dow dropped nearly 90 points Trump threatened that he would be willing to shut down the government if his border wall isn't funded in the new budget.
President Trump has had to deal with continuous turmoil since taking office. The White House has dealt with key personnel changes and a string of controversies stemming from comments made by the incumbent.
These factors have raised doubt about whether the administration will be able to move forward with its economic agenda, which includes tax reform and fiscal stimulus.
"That leaves the market with one leg to stand on, which is earnings growth and gradual improvement to GDP," said Tom Martin, senior portfolio manager at Globalt. "We can't have a break in government. I think that's worrying the market."
But Paul Ryan told CNBC's "Power Lunch" that item's on the GOP agenda, such as tax refrom, are still achievable this year. "We can walk and chew gum at the same time," he said. "This is something we're all in on. We're totally focused on it and our tax writers ... are deep into the details producing the bill."
On the data front, the number of Americans filing for unemployment benefits fell last week, pointing to a further tightening in the labor market that could encourage the Federal Reserve to lay out a plan to start unwinding its balance sheet. Initial claims for state unemployment benefits totaled 234,000, below expectations of 238,000.