“The possibility of something weird happening over the weekend leads people to take money off the table as the week comes to a close,” he said.
China added fuel to the fire of the increasingly rancorous trade war with the US, striking a more aggressive tone and suggesting further talks could be fruitless unless Washington changes course.
Elsewhere in the multi-front US tariff war, President Donald Trump confirmed he would delay imposing imported auto tariffs by as much as six months, and agreed to lift metal tariffs on Canada and Mexico.
Trade headlines overshadowed upbeat economic data. The University of Michigan’s consumer sentiment index jumped 5.3 per cent in May to its highest reading in 15 years.
“After earnings season the market seems to shift to these macro factors that are difficult to predict and difficult to trade on,” Tuz said.
“You see more whipsawing in the markets in this kind of environment.”
Tariff jitters also dragged on key industrial shares.
Farm equipment maker Deere & Co was the biggest percentage loser on the S&P 500, dipping 7.7 per cent after cutting its full-year forecast.
Caterpillar, 3M, Textron, General Dynamics and Fedex all helped pull the industrial sector 1.1 per cent lower.
The Dow Jones Industrial Average fell 98.68 points, or 0.38 per cent, to 25,764, the S&P 500 lost 16.79 points, or 0.58 per cent, to 2859.53 and the Nasdaq Composite dropped 81.76 points, or 1.04 per cent, to 7816.29.
Of the 11 major sectors in the S&P 500, all but utilities closed in the red, with industrials and energy seeing the largest percentage losses.
With 460 of S&P 500 companies having posted first-quarter results, 75.2 per cent of which beat analyst expectations, the mostly upbeat first-quarter earnings season is nearly complete.
Analysts now expect first-quarter earnings growth of 1.4 per cent, a significant turnaround from the 2 per cent loss expected on April 1.
Active wear company Under Armour gained 7.8 per cent following JP Morgan’s upgrade of the stock to “overweight”.
Pinterest slumped 13.5 per cent after its first quarterly earnings report as a publicly-traded company.
Shares of Luckin Coffee jumped 19.9 per cent as the Chinese challenger to Starbucks made its debut.
Declining issues outnumbered advancing ones on the NYSE by a 2.96-to-1 ratio; on Nasdaq, a 2.52-to-1 ratio favoured decliners.
The S&P 500 posted 33 new 52-week highs and 6 new lows; the Nasdaq Composite recorded 55 new highs and 101 new lows.
Volume on US exchanges was 6.71 billion shares, compared to the 6.98 billion average over the last 20 trading days.