Within the Dow, Caterpillar fell 3.8% to pace decliners after reporting a sharp drop in global retail machinery sales for the three months through April. The S&P 500 index shed nine points, or 0.5%, to 1876 and the Nasdaq Composite Index dropped 23 points, or 0.6%, to 4104.
The Russell 2000 index of small-cap stocks slumped 1.2%, after rallying 1.7% over the previous two sessions. The index was now 8.9% below its March 4 record.
Although the market was weak from the open, traders said activity picked up midday after Federal Reserve Bank of Philadelphia President Charles Plosser, a noted hawk, said interest rates may have to rise sooner rather than later. The Fed has been gradually paring back on its highly stimulative bond-buying program this year, but most expect the Fed to keep short-term interest rates anchored near zero well into 2015.
The broad weakness in stocks helped support investments viewed as havens, such as Treasurys. The yield on the 10-year Treasury note slipped to 2.509%, which was just above the near seven-month low of 2.502% where it settled on Thursday. Yields fall as Treasury prices rise. And while overall activity was relatively light, traders noted that volume in some exchange-traded funds tracking Treasury prices were well above average.
Gold futures, which also attract risk-averse investors, rose 0.1% to $1,294.50, erasing an early loss of as much as 0.6%.
Crude-oil futures eased 0.2% to $102.44 a barrel. The dollar nudged higher against the euro but eased slightly against the yen.
European markets declined, with the Stoxx Europe 600 closing down 0.1%. The index has lost 1% since closing at a more than six-year high a week ago.
Asian markets closed mostly higher. China’s Shanghai Composite tacked on 0.1% and Japan’s Nikkei Stock Average advanced 0.5%.