Stocks extended their modest drop by late morning Thursday after an increase in crude inventories wiped out most of the gains in oil prices.
The S&P 500 fell 0.5%, the Dow Jones Industrial Average was down 0.12%, and the Nasdaq fell 0.76%.
Crude oil erased earlier gains after weekly inventories showed an increase of 2.1 million barrels last week. Analysts had expected the Energy Information Administration data to show a decline of 1.4 million barrels. West Texas Intermediate crude oil edged 0.3% higher to $30.74 a barrel.
Stocks secured their first three-day winning streak of the year on Wednesday as concerns over oil, the U.S. economy and the Federal Reserve's rate-hike plans were all addressed in turn. The S&P 500 broke out of correction territory and is now down less than 10% from its 52-week high.
The labor market continued to show its strength on Thursday as weekly jobless claims fell to their lowest level since November. The number of new claims for unemployment benefits fell 7,000 to 262,000 in the past week. The four-week jobless claims average, a read that smooths out week-to-week fluctuations, slid 8,000 to 273,250.
Economic activity in the Philadelphia region improved in February, though remained in contraction. The Philadelphia Fed Index rose to negative 2.8 this month from a reading of negative 3.5 in January. New orders and the employment index were weaker.
Fed watchers got an unexpected bit of news Wednesday evening after St. Louis Fed President James Bullard said it would be "unwise" for the central bank to continue to raise rates in the face of inflation pressure and financial market volatility. The voting member of the Federal Open Market Committee had supported an earlier hike for much of last year.