Financials were the biggest drag on the market after both Goldman Sachs Group Inc and Citigroup Inc reported that lower bond trading revenue took a bite out of their quarterly profits. Goldman's earnings fell 21 percent. Citigroup's profit missed expectations.
The results followed fairly positive reads on the financial sector with earnings from Bank of America Corp, JPMorgan Chase & Co and Wells Fargo & Co earlier this week.
Goldman's stock slid 2 percent to close at $175.17. It was the biggest drag on the Dow. Citigroup's stock dropped 4.4 percent to end at $52.60 and was the biggest negative for the S&P 500. The S&P financial sector index fell 0.6 percent, making it the biggest loser among the 10 sectors in the S&P 500.
Analysts said that given the S&P 500's gain of 30 percent last year, the market doesn't need much of a catalyst for selling.
"You get a day like today with a little disappointment following a day when the market was up big, and we get a selloff like this," said Bucky Hellwig, senior vice president of BB&T Wealth Management in Birmingham, Alabama.
Concerns that stock valuations may be too high put some pressure on stocks after last year's rally. But the S&P 500 index surged 1.6 percent over the previous two sessions on results and economic data to close at a record high on Wednesday, its first since Dec. 31.
The Dow Jones industrial average fell 64.93 points or 0.39 percent, to end at 16,417.01. The S&P 500 slipped 2.49 points or 0.13 percent, to finish at 1,845.89. The Nasdaq Composite added 3.805 points or 0.09 percent, to close at 4,218.688.
Though the earnings season has just started, companies are beating expectations at a rate that's below the long-term average. With earnings from 6 percent of the S&P 500 companies so far, 48 percent have exceeded expectations, below the historical average of 63 percent for a full season, Thomson Reuters data showed.
INTEL, AMERICAN EXPRESS OFF LATE
After the closing bell, shares of Intel Corp tumbled 2.4 percent to $25.90 following its results and a lukewarm revenue forecast. In regular trading, Intel had slipped 0.5 percent to end at $26.54.
American Express Co shares dipped 0.03 percent to $87.75 in extended-hours trading following the release of its results. American Express shares had ended regular trading at $87.78, down 0.5 percent.
During the regular session, UnitedHealth Group Inc fell 2.8 percent to close at $72.76 after the largest US health insurer said that implementing the national healthcare reform law, often called Obamacare, and funding cuts for private Medicare coverage would result in expenses that would eat into 2014 profit. UnitedHealth, however, reported a higher fourth-quarter profit on Thursday and said 2014 earnings would improve.
Shares of UnitedHealth's major competitors fell as well, including Aetna Inc, down 1.6 percent at $70.23.
CSX Corp shares sank 6.8 percent to $27.24 a day after the US railroad reported profits that missed expectations.
The stock of Best Buy Co Inc plunged 28.6 percent to close at $26.83, making it easily the S&P 500's biggest percentage decliner, followed by CSX. Best Buy, the world's largest consumer electronics chain, reported a drop in holiday sales and forecast a bigger-than-expected decline in quarterly operating margins.
The day's economic data included initial claims for state unemployment benefits, which slipped 2,000 to a seasonally adjusted 326,000 in the week ended Jan. 11. Claims for the prior week were revised to show 2,000 fewer applications received than previously reported, suggesting a sharp slowdown in job growth in December was likely to be temporary.
The Consumer Price Index rose 0.3 percent in December while the core CPI, which strips out volatile food and energy prices, edged up only 0.1 percent, suggesting underlying inflation was muted. The Philadelphia Federal Reserve Bank said its business activity index stood at 9.4 points in January, compared with 6.4 in December.
In the deal arena, Apollo Global Management LLC said it would buy CEC Entertainment Inc, the parent of the Chuck E Cheese restaurant chain, for about $948 million. CEC Entertainment's stock jumped 13.1 percent to $54.75. Apollo Global's shares rose 0.8 percent to end at $36.05.
Volume was slightly below the average for the month. About 6.4 billion shares changed hands on US exchanges, compared with the average of 6.6 billion so far this month, according to data from BATS Global Markets.
Advancers outnumbered decliners on the New York Stock Exchange by a ratio of about 17 to 12. On the Nasdaq, advancers were about even with decliners.