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The S&P 500 ended below its 50-day moving average of 1,543.04 for the first time this year, giving more weight to views that the market's recent rally is losing momentum, particularly after two days of sharp declines earlier this week.
The Nasdaq 100 and the Russell 2000 indexes both have closed below their 50-day averages this week, adding to the overall technical pressure on the market.
Technology led the day's fall. Shares of eBay
Apple
The CBOE Volatility Index, Wall Street's fear index, gained 6.4% to 17.56. The VIX is up roughly 46% for the week so far. It still remains well below its recent highs, but the gains could signal a change in the market trend.
"There's definitely technical damage," said Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston. "I think that the period we had that had volatility tamped way down has likely ended."
Stocks have rallied for much of the year on views that the US economy is strengthening and the Federal Reserve will keep its economic stimulus in place.
More recent data on the economy has been less upbeat. On Wednesday, reports showed factory activity in the Mid-Atlantic region cooled in April and the index of leading indicators, a gauge of future US economic activity, fell in March for the first time in seven months.
The Dow Jones industrial average slid 81.45 points, or 0.56%, to end at 14,537.14. The Standard & Poor's 500 Index dropped 10.40 points, or 0.67%, to 1,541.61. The Nasdaq Composite Index fell 38.31 points, or 1.20%, to close at 3,166.36.
After the bell, a number of high-profile tech companies reported results, including International Business Machines
Google
During Thursday's regular session, volume was roughly 7.05 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT. In comparison, the average daily closing volume is about 6.36 billion this year.
Decliners beat advancers by about 16 to 13 on the NYSE and by about 5 to 3 on Nasdaq.
Volume has been heavier on negative days this week, as many investors have anticipated a pullback for some time after stocks' strong run to start the year, and moved quickly to book profits.
The S&P 500's moving average was also the floor of the trading range during the last month, making 1,543 a key technical support, according to Richard Ross, global technical strategist at Auerbach Grayson in New York.
Ross and others noted that the S&P 500 has posted negative second quarters in the last three years.
The S&P 500's healthcare sector also experienced big declines, with UnitedHealth Group Inc
Other decliners included Morgan Stanley
S&P 500 earnings are expected to have risen 1.9% in the first quarter, up from the 1.5% estimate at the start of the month, based on actual results from 82 companies and estimates for the rest, according to Thomson Reuters data as of Thursday morning.
Of companies that have reported, 72% have topped analysts' expectations, but only 43.9% have beaten revenue forecasts.
