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Markets have been volatile this week, with the S&P posting both its biggest one-day gain since early February and its biggest one-day loss since early January.
Crude oil fell 2.1% after the International Energy Agency said a global oil glut was building and U.S. oil production showed no signs of slowing. The commodity has fallen in six of the past seven sessions.
The S&P energy index fell 1%, among the biggest decliners of the 10 primary S&P 500 sectors. Chevron Corp fell 1.4% to $101.03 while Occidental Petroleum lost 1.4% to $73.50.
"It's a bit of a surprise that the U.S. continues to produce at such a high level, and that amount of oil surplus continues to push the commodity lower," said Michael Arone, chief investment strategist for State Street Global Advisors' U.S. Intermediary Business in Boston.
"I don't expect oil will go much lower, but as it keeps falling there are bigger concerns that we could see problems with respect to capital expenditures and employment in certain regions of the country."
U.S. consumer sentiment fell in March, dropping well below expectations, according to the University of Michigan's preliminary monthly reading.
The U.S. dollar index rose 0.6% and was set for its fourth straight weekly rise. Investors see the continued strength in the greenback as a threat to multinational corporate profits.
Investors are also looking ahead to next week's Federal Reserve meeting, which could provide further insight into when the first rate increase will come.
FXCM Inc jumped 20% to $2.59 in heavy trading a day after fourth-quarter earnings beat expectations. This was the currency broker's first quarterly report since the removal of the cap on the Swiss franc sparked massive losses that pushed it to take a rescue loan.
Aeropostale Inc slumped 12% to $3.25 a day after forecasting a wider quarterly loss than had been anticipated.
The Dow is on track for a weekly drop of 0.1% while the Nasdaq is on track for a drop of 0.5%. The S&P is down 0.4% on the week, and if it ends negative for the week, that will mark its third straight weekly decline.
The Dow Jones industrial average fell 63.8 points, or 0.36%, to 17,831.42, the S&P 500 lost 3.59 points, or 0.17%, to 2,062.36 and the Nasdaq Composite added 4.62 points, or 0.09%, to 4,897.91.
Declining issues outnumbered advancing ones on the NYSE by 1,856 to 855, for a 2.17-to-1 ratio; on the Nasdaq, 1,279 issues fell and 1,002 advanced, for a 1.28-to-1 ratio.
The S&P 500 was posting 19 new 52-week highs and 16 new lows; the Nasdaq Composite was recording 86 new highs and 52 new lows.
