NEW YORK - U.S. stocks eased further from recent record highs on Thursday as energy shares dropped along with oil prices and investors continued to digest comments by Federal Reserve Chairman Jerome Powell.
The energy index was down the most among the major S&P sectors, falling 1.71% and extending its recent slide. U.S. oil prices slid more than 2 percent on fears of oversupply.
"For better or worse, a lot of investors have been trained to respond to the decline of oil, where it could mean demand is light and, thus, economic activity is light," said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh.
Powell's comments on Wednesday that a decline in inflation this year could be due to transitory factors dampened some investors' hopes that the U.S. central bank could move later this year to cut interest rates, market watchers said.
Traders lowered their bets on a rate cut this year following Powell's comments, and stocks fell, but many investors said the Fed's stance makes sense.
"I don't think reasonable investors are looking for a rate cut at this moment. And the good economic conditions don't necessarily point to a rate hike either," Forrest said.
The S&P 500's recent run to record highs also may be giving investors reasons to pause.
Stocks have "done extremely well and pockets of the market are overdone," said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey. "Usually when the market moves that quickly, a little bit of caution comes in."
The index has rallied more than 16 percent this year and is entering a period of the year traditionally known as being difficult for equities over the next six months.
On the day, the Dow Jones Industrial Average fell 122.35 points, or 0.46%, to 26,307.79, the S&P 500 lost 6.21 points, or 0.21%, to 2,917.52, and the Nasdaq Composite dropped 12.87 points, or 0.16%, to 8,036.77.
With the first-quarter earnings season winding down, investors are looking for fresh catalysts such as U.S.-China trade developments and economic data.
Markets also are waiting for a reading of the Labor Department's non-farm payrolls data on Friday that is expected to show fewer job additions last month compared with March.
More than 350 of the S&P 500 companies have reported their results so far on the first quarter. Analysts now expect earnings to have risen 0.7%, compared with the 2% fall estimated at the beginning of April, according to IBES data from Refinitiv data.
Among gainers, Qualcomm Inc rose 0.9% after analysts said the chipmaker was well positioned in the 5G networks space even as it forecast disappointing current-quarter sales.
The Philadelphia Semiconductor index gained 1.1%.
Among decliners, Dow Inc, the commodity chemicals division spun off from DowDuPont Inc, tumbled 6.1% after reporting a fall in core earnings.
Kellogg Co dropped about 3.4% after the cereal and snacks maker said it would replace its chief financial officer and reported a decline in first-quarter earnings.
But shares of vegan burger maker Beyond Meat Inc ended up 163% in their market debut Thursday.
Declining issues outnumbered advancing ones on the NYSE by a 1.43-to-1 ratio; on Nasdaq, a 1.05-to-1 ratio favored advancers.
The S&P 500 posted 13 new 52-week highs and six new lows; the Nasdaq Composite recorded 50 new highs and 62 new lows.
Volume on U.S. exchanges was 7.31 billion shares, compared to the 6.61 billion average for the full session over the last 20 trading days.