Investing.com - U.S. stocks gave back earlier gains stemming from upbeat U.S. data and a European Central Bank move to loosen policy, as investors sold for profits and jumped to the sidelines ahead of Friday's August jobs report.
At the close of U.S. trading, the Dow 30 fell 0.05%, the S&P 500 index fell 0.15%, while the NASDAQ Composite index fell 0.22%.
The Volatility S&P 500 index, which measures the outlook for market volatility, was up 2.27% at 12.64.
The U.S. services sector grew at its strongest pace in August since 2005, which sparked a rally on Wall Street earlier.
The Institute for Supply Management reported that its services index rose to 59.6 in August from 58.7 in July, far surpassing market forecasts for a downtick to 57.5.
A reading above 50 indicates expansion in the sector, and the index offset lackluster U.S. employment data.
The Labor Department reported that the number of individuals filing for first-time unemployment assistance in the U.S. last week rose by 4,000 to 302,000 from the previous week’s total of 298,000.
Analysts had expected jobless claims to rise by 2,000 to 300,000 last week.
Elsewhere, payroll processor ADP reported that its nonfarm payrolls report showed that the private sector added 204,000 jobs in August, missing expectations for jobs growth of 220,000.
At the same time data showed that the U.S. trade deficit narrowed to the lowest in six months in July.
Stocks also applauded an ECB decision to stimulate the European economy.
The European Central Bank trimmed its benchmark interest rate to a record-low 0.05% from 0.15%, surprising many market analysts who had expected no change.
The central bank also lowered its deposit facility rate to -0.20% from -0.10% previously and its marginal lending rate to 0.30% from 0.40%.
Stocks rallied after ECB President Mario Draghi said the bank will begin an asset-backed securities purchasing program to shore up the recovery and steer the continent away from deflationary decline.
Draghi did not say how much debt the ECB planned to purchase, as further details will emerge in October.
The ECB cut its forecast for growth this year to 0.9% down from 1.0% previously and cut the forecast for 2015 to 1.6% from 1.7%. The bank also lowered its inflation forecast for this year to 0.6% from 0.7% in June.
Later in the session, investors locked in gains and sold stocks for profit, sending broader indices dipping into negative territory.
Investors were eager for the release of the August nonfarm payrolls report early Friday morning.
Leading Dow Jones Industrial Average performers included Nike Inc (NYSE:NKE), up 1.40%, Home Depot Inc (NYSE:HD), up 1.05%, and Procter & Gamble Company (NYSE:PG), up 0.97%.
The Dow Jones Industrial Average's worst performers included Walt Disney Company (NYSE:DIS), down 0.89%, Chevron Corporation (NYSE:CVX), down 0.83%, and Exxon Mobil Corporation (NYSE:XOM), down 0.76%.
European indices, meanwhile, ended the day higher.
After the close of European trade, the DJ Euro Stoxx 50 rose 1.78%, France's CAC 40 rose 1.65%, while Germany's DAX rose 1.02%. Meanwhile, in the U.K. the FTSE 100 rose 0.06%.