Stocks turned negative as oil prices climbed back above $100 a barrel on news of Libyan air strikes, and as Federal Reserve Chairman Ben Bernanke spoke before Congress for a second day.
TheDow Jones Industrial Average fell more than 15 points after bouncing between positive and negative territory a day after selling off as rising oil prices overshadowed strong manufacturing data.
Boeing and McDonald's led Dow components lower, while 3M and Hewlett-Packard gained.
The S&P 500 fell, while the Nasdaq rose. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 21.
Among key S&P 500 sectors, financials, consumer staples and utilities fell, while telecom and tech rose.
U.S. private employers added 217,000 jobs in February, beating analysts' expectations, according to ADP Employer Services, a payrolls processor, and Macroeconomic Advisers. In January, private employers added 189,000 jobs, revised from 187,000.
The market didn't move initially after the strong report, as the data has not been a great predictor for the government's monthly nonfarm payrolls report, said Todd Schoenberger, managing director at LandColt Trading.
"ADP would have needed to be much higher for the markets to rally on this report," Schoenberger said.
Economists expect the Labor Department will report a 185,000 gain in nonfarm payrolls, and a 190,000 gain in private-sector jobs when the data is released Friday, according to Reuters.
Meanwhile, oil markets remain rattled by news in the Middle East, as forces loyal to Muammar Gaddafi intensified fighting, and a Libyan warplane reportedly dropped a bomb near an oil exporting terminal.
The price of U.S. light sweet crude rose above $100 a barrel. London Brentcrude traded above $116.
Stocks in Saudia Arabia, meanwhile, tumbled to a 22-month lowamid calls for nationwide protests later this month. (Read more: Traders Watching Saudis Nervously).
“This rise in the oil price—particularly given it’s on supply issues—is just not good news for sustaining that (recovery) momentum into the second half of the year,” Karen Ward, global economist at HSBC said.