U.S. stocks closed more than 1 percent lower Thursday, pressured by sharp declines in oil prices, as investors eyed several speeches from Federal Reserve officials.
"I think we're down due to energy prices more than anything else," said Peter Cardillo, chief market economist at First Standard Financial.
"That along with the fact the market is in a downward consolidation phase," he said. "What we're seeing is a market that is correcting and using some excuses — the oil price decline and some of the Fed comments as well."
Declines in the S&P 500 and Dow Jones industrial average accelerated in midday trade after the two indexes fell below their 200-day moving averages.
The Dow Jones industrial average fell more than 250 points, with Goldman Sachs (GS) contributing the most to declines.
The blue chips index is on track for its worst week in ten. All three major averages are down more than 2 percent for the week so far.
The Nasdaq composite fell more than 1 percent to end just above 5,000. Netflix (NFLX) fell nearly 3.5 percent.
The S&P 500 closed down 1.4 percent, ending in negative territory for the year for the first time since Oct. 22. The last time the index fell into the red for 2015 in intraday trade was on Oct. 27.
Energy traded about 2 percent lower as the greatest decliner in the S&P, which was lower for the sixth time in seven sessions.
Crude oil futures settled down $1.18, or 2.75 percent, at $41.75 a barrel, after the U.S. government reported a stockpile build four times above market expectations.
Earlier, WTI fell to $41.63 a barrel, its lowest intraday level since Aug. 27. The commodity has lost nearly 10 percent in November alone, on pace for its worst month since July.
"The real question for the market here is, are low oil prices an indication of global weakness or really you have oversupply (and you have to find) equilibrium," said Quincy Krosby, market strategist at Prudential Financial.
Read More Oil prices melt down, could retest low
"The correlation between the S&P and oil continues to be very tight," said Art Hogan, chief market strategist at Wunderlich Securities.
"We sort of came into this morning with a mild upside bias but what's dragging us down is energy but it's also rethinking reset on the consumer after Macy's (NYSE:M)," he said.
Macy's traded higher after posting its worst trading day since 2008 on Wednesday following mixed quarterly results.
"This clearly tells you there's a problem with the consumer," said Adam Sarhan, CEO of Sarhan Capital.
Nordstrom (JWN) is due to post quarterly results after the close.
Before the open, Kohl's (KSS) reported third-quarter earnings that beat by 6 cents, on revenue that also exceeded consensus. The retailer said same-store sales rose 1 percent, topping expectations of 0.6 percent.
The three major indexes briefly pared losses in late-morning trade, as the Nasdaq Composite tried for gains.
On the data front, weekly jobless claims came in at 276,000, unchanged week over week, but higher than the expected 270,000.
"Jobless claims have been very solid," said Randy Frederick, managing director of trading and derivatives at Charles Schwab. "Jobless claims and nonfarm payrolls can't diverge too far and at some point the claims have to spill over int the jobs report."
The September JOLTS report showed job openings were at 5.5 million, the Bureau of Labor Statistics said.
"The Fed looks at the JOLTS data but it's a month lag," said Marie Schofield, chief economist and senior portfolio manager at Columbia Threadneedle Investments.
She said while the Fed is generally not concerned about the labor market, October's strong jobs report likely exaggerated employment conditions due partly to seasonal factors. Schofield expects a softer November report that could delay a rate hike to January, especially if data continues to show little inflation.
Thursday's session also featured several Fed speakers, including Fed Chair Janet Yellen , who delivered welcoming remarks at a conference in Washington, D.C., as investors continued to look for clues about the central bank's timing on hiking interest rates.
FOMC Vice Chair and New York Fed President William Dudley pointed towards a rate hike and said the pace of tightening should be gradual .
Another voting member, Fed Vice-Chairman Stanley Fischer, is also expected to speak.
"For the most part they seem to be on the same page, especially Dudley," Krosby said.
"There's still right now just a little bit of uncertainty. It's clear December is still 'live,'" she said.
Earlier, St. Louis Fed President James Bullard — a non-voting member — also spoke on the economy, saying the Federal Open Market Committee's unemployment and inflation goals have been met.
Read More Fed's Bullard: It's time to raise rates
Richmond Fed President Jeffrey Lacker said in another speech that caution should apply to the notion that policy should respond to signals of incipient financial instability.
Chicago Fed President Charles Evans said the Fed is close to to reaching its employment mandate, but added he is less confident about reaching the inflation goal within a reasonable time frame.
The chances of a Fed rate hike rose sharply after last Friday's jobs report came in better than expected. However, Sarhan said the recent problems within the retail and consumer discretionary space "indicate Main Street is not ready for a rate hike."
"I think it's uncertainty over the Fed that's driving the market at this stage of the game," he said.
Investors also digested remarks made by European Central Bank President Mario Draghi, in which he kept the door open for more economic stimulus.
"The level of QE the ECB has undertaken has helped but it hasn't been enough," said Nick Raich, CEO of The Earnings Scout.
Draghi's remarks briefly pushed the euro back below $1.07. The euro held near $1.079 in afternoon trade. The dollar traded slightly lower against major world currencies.
European equities closed sharply lower Thursday, with the pan-European Stoxx 600 index dropping more than 1.5 percent.
Asian stocks closed mixed , with the Shanghai composite falling about 0.45 percent and the Nikkei 225 gaining just 0.03 percent. Hong Kong's Hang Seng index was the outperformer, rising 2.4 percent.
In other corporate news, Liberty Media said it will recapitalize its common stock into three separate tracking stocks, known as Liberty Braves, Liberty Media, and Liberty Sirius.
Viacom matched estimates with adjusted quarterly profit of $1.54 per share, with revenue slightly below consensus.
In afternoon trade, the Dow Jones industrial average (Dow Jones Global Indexes: .DJI) fell 206 points, or 1.17 percent, to 17,496, with Caterpillar (CAT) the greatest decliner and United Technologies (UTX) leading advancers.
The S&P 500 (^GSPC) fell 22 points, or 1.05 percent, to 2,053, with energy leading all 10 sectors lower.
The Nasdaq Composite (^IXIC) traded down 44 points, or 0.87 percent, at 5,023.
The benchmark 10-year Treasury yield (U.S.:US10Y) was little changed near 2.32 percent.
About four stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 565 million and a composite volume of nearly 2.9 billion as of 3:02 p.m.
The CBOE Volatility Index (VIX) (^VIX), widely considered the best gauge of fear in the market, jumped above 17.
Gold futures settled down $3.90 at $1,081.00 an ounce.
— CNBC's Peter Schacknow and Reuters contributed to this report.
On tap this week:
Earnings: Cisco Systems, Petrobras, Applied Materials, Nordstrom, Blue Buffalo, El Pollo Loco, Party City, Planet Fitness, Sunrun
6 p.m.: Federal Reserve Vice Chairman Stanley Fischer
Earnings: Tyco, Berry Plastics, J.C. Penney, WGL Holdings
8:30 a.m.: Retail Sales; Retail Sales ex-autos; PPI; PPI ex-food & energy
10 a.m.: Consumer Sentiment; Business Inventories
12:30 p.m.: Cleveland Fed President Loretta Mester
*Planner subject to change.
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