Stocks pared losses by late morning Thursday, though remained in the red as a series of speeches from Federal Reserve members highlighted a more hawkish tone on monetary policy.
The S&P 500 was down 0.34%, the Dow Jones Industrial Average fell 0.86%, and the Nasdaq slid 0.1%.
St. Louis Federal Reserve President James Bullard argued for a rate hike during one of the many Fed speeches scheduled throughout the day.
"While the [Fed's] goals have been met, the policy settings remain as extreme as they have been at any time since the recession ended in 2009," Bullard told an audience at the Cato monetary policy conference in Washington. "There is no reason to continue to experiment with extreme policy settings."
Richmond Fed President Jeffrey Lacker also appeared to back a rate hike, noting that the Fed could still influence inflation regardless of a weak "Phillips Curve." Economists have argued recently that the relationship between lower unemployment and higher inflation, the Phillips Curve, had broken down and that the central bank should wait for higher wages before hiking rates.
Investors have been cautious as they await further clues as to when the Fed could hike interest rates for the first time in nearly a decade. The odds are greater on a December rate hike after a stellar October jobs report supported the case for tighter monetary policy.
Financials stocks were the worst performers Thursday as a December rate hike appeared more likely. Major banks Bank of America (BAC) , Citigroup (C) , Goldman Sachs (GS) and Barclays (BCS) were lower, while the Financial Select Sector SPDR ETF (XLF) dropped 0.6%.
Weekly jobless claims in the U.S. remained flat at 276,000 in the week ended Nov. 7, according to the Labor Department. The number of new claims for unemployment benefits was expected to fall to 270,000. However, the measure remained near 15-year lows in another sign of a tightening labor market.
Stocks fell on Wednesday as a troubled retail sector gave the market little reason to move higher. Macy's (M) suffered its worst daily performance in eight years after reporting its third straight quarter of declining sales. J.C. Penney (JCP) also moved lower ahead of its earnings report on Friday.
Fellow retailer Kohl's (KSS) did manage to report a strong quarter, driven by better-than-expected back-to-school sales and a rebound in traffic in October. The company earned 75 cents a share, 6 cents above estimates, while revenue climbed 1% to $4.43 billion and beat forecasts. Shares climbed 7% on Thursday.
Angie's List (ANGI) spiked 13% after receiving an acquisition offer from InterActiveCorp (IACI) worth $512 million, a 10% premium to the company's Wednesday close. InterActive said it would consider combining the home services search engine with its HomeAdvisor business.
Activist hedge fund Elliott Management increased ownership in Dialog Semiconductor (DLGNF) to 3.6% as it works to convince the company to drop its bid for industry peer Atmel (ATML) . The fund said it had received positive feedback for its argument against the acquisition.
PayPal (PYPL) fell more than 1% on reports Apple (AAPL) is exploring a rival mobile payments service tied back to its Apple Pay platform. The tech giant is reportedly in talks with JPMorgan and Wells Fargo to set up the service, according to The Wall Street Journal. A 2016 launch date is expected.