The weakness also reflects the fact markets rarely go up day-after-day, Gendreau said, but the trend remains positive as stock valuations are "between inexpensive and reasonable," the earnings forecast is good, and the economy seems to be picking up.
"The foundations are in place for a reasonably good year," he said.
In a positive sign for the equity markets, $335 million flowed into U.S. stock funds for the week ended Dec. 21, the first sign of inflows in nearly three years, according to the Investment Company Institute, a mutual fund trade group. Bond funds, meanwhile, had outflows of about $4.37 billion, the ICI said.
The week before, 2.4 billion flowed out of U.S. equity funds, while $8.6 billion flowed out of bond funds. Analysts expect investors to move into stock fundsas bonds and emerging markets lose favor.
In corporate news, Anadarko Petroleum jumped more than 5 percent after a report in the U.K.'s Daily Mail that BHP Billiton may bid $90-a-share for the oil and natural gas producer, citing unnamed sources.
Oil prices closed below $90 a barrelas investors booked year-end profits after the recent jump in crude above $91. Investors shrugged off a government report showing crude oil inventories fell last week, though less than expected.
The energy sector, however, continued to trade at record highs. The leading energy stocks included Cabot Oil & Gas , Haliburton and Sunoco .
In financials, Goldman Sachs and Morgan Stanley slipped after Credit Suisse lowered fourth quarter earnings estimates for the investment banks. Citing "persisting choppy market conditions," among other factors.
T. Rowe Price climbed after Stifel Nicolaus raised its price target for the investment manager to $74 a share from $59, and its earnings-per-share view for 2011 to $3.24 a share from $3.15, citing the flow of investor assets back into stocks.
Meanwhile, MBIA soared after JPMorgan and Barclays dropped opposition to the bond insurer's plans to restructure.
U.S. private equity firm Blackstone and Spain private equity company Dinamia agreed to make a binding offer for Mivisa, launching a management buyout for the Spanish food cans maker.
Shares of Ford declined slightly after news the automaker said it is recalling more than 14,000 new vehiclesbecause of the possibility of an electric short.
December is expected to be the third straight month that U.S. auto sales hold above 12 million vehicles on an annualized basis, capping a year of gradual recovery for the auto sector, according to industry analysts.
Automakers are due to report monthly sales figures next Tuesday.
On the health care front, Endo Pharmaceuticals rose after news the FDA approved a gel to treat men with low levels of testosterone.
3M was down slightly after news the state of Minnesota sued the diversified manufacturer for contaminating the state's waters for decades.
The New York Times reported social coupon site Grouponmay go public in 2011. On Tuesday, the company's board authorized Groupon to raise up to $950 million in funding, according to a recent Delaware regulatory filing. The company said Thursday it raised $500 million toward that effort.Google reportedly tried to buy the Chicago company for between $5 billion and $6 billion but was rejected in early December.
The dollar fell against a basket of currencies, while the euro rose after a European Central Bank Governing Council member said the European Stability Mechansim should come into force before 2013, if possible.
Meanwhile, the Chinese yuan reached a new high against the dollar after the People's Bank of China set a higher mid-point for the currency.
Gold prices eased, closing at $1,405.60 an ounce. Copper prices, meanwhile, hit a new record high, rising 1.16 percent to close at $4.4.
Miners were also lower across the board, including AngloGold and Kinross .
China GengSheng Minerals skyrocketed more than 60 percent, although the company said it can't explain the sharp move.
Pending home sales jumpedmore than expected last month, although sales were still below normal levels, the National Association of Realtors said Thursday. The National Association of Realtors Pending Home Sales Index, based on contracts signed in November, rose 3.5 percent to 92.2 from a downwardly revised 89.1 in October. Sales, however, were 5 percent lower than last year.
The Institute for Supply Management-Chicago's business index soared to 68.6 in Decemberfrom 62.5 a month earlier, boosted by gains in employment and new orders.
Economists surveyed by Reuters had expected this measure of Midwest manufacturing activity to drop to 61.
And initial claims for jobless benefits fell to 388,000 for the week ended Dec. 25 from a revised upward 422,000, a 29-month low, the Labor Department reported. Economists surveyed by Reuters had expected claims to fall to between 415,000 and 420,000. The 4-week moving average for claims fell 12,500 to 414,000.
The markets didn't react much to the news as economists say seasonal factors add volatility to the numbers.
European shares closed lower, paring some of December's strong gains on the last day of trading in countries including Germany, Spain and Italy, with China growth and euro zone debt concerns weighing on sentiment.
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