North Korea threat: Investors were rattled after the Department of Defense announced that it was sending a land-based missile defense system to Guam to defend against possible North Korean ballistic missile launches.
Speaking at the National Defense University, Defense Secretary Chuck Hagel said North Korea presents "a real and clear danger and threat" to the United States.
"We are doing everything we can, working with the Chinese, others, to defuse that situation on the peninsula," said Hagel.
Fed ready to end bond buying? Investors also took a step back after San Francisco Federal Reserve Bank president John Williams said that if the economy improves, as he suspects it will, the Fed could start tapering its bond purchase program.
Williams said he expects to continue seeing a substantial improvement in the job market by this summer.
"If all goes as hoped, we could end the purchase program sometime late this year," Williams said, speaking in Los Angeles.
The Fed's stimulus measures, including its commitment to low interest rates and several rounds of bond buying, have been largely credited for fueling the stock market rally.
All about jobs:Payroll processing firm ADP reported Wednesday that the U.S private sector added 158,000 jobs in March. That was weaker than expected and comes just days ahead of the government's closely watched monthly jobs report.
On Friday, the Labor Department is slated to release the March jobs report ahead of the opening bell. Analysts expect the economy to have added 192,000 jobs last month, according to Briefing.com.
Meanwhile, the Institute for Supply Management's monthly report on growth in the service sector was also disappointing. The ISM Services index came in at 54.4 for March, marking the weakest pace of growth in seven months.