The Dow Jones industrial average fell lost 45.79 points to close at 7,039.37, having recovered from a loss of more than 74 points.
Decliners led advancers by a 5-to-3 margin on the New York Stock Exchange, with 946 up, 1,603 down and 816 unchanged. NYSE volume was 483.12 million shares, vs. 491.33 million yesterday.
Broader indicators also pulled lower during the afternoon after spending much of the day with fairly modest losses.
Bellwether technology shares continued to struggle, pressuring the market.
The Standard & Poor's 500-stock list fell 7.08 to 804.26, and the NYSE's composite index fell 3.52 to 423.54. The Nasdaq composite fell 12.62 to 1,304.14, and the American Stock Exchange composite lost 1.39 to 602.04.
Bonds traded nearly unchanged until about 2 p.m., when the Federal Reserve released its Beige Book report on regional economic conditions. The report showed that the economy's surprising vigor has continued to create jobs, but that the resulting competition for workers hasn't led to pronounced wage increases -- a key force behind inflation.
The news temporarily helped lift bonds, which are considered less attractive investments when there's a risk of inflation. As bond prices improved, the yield on the 30-year Treasury bond -- a key determinant of borrowing costs -- fell from late yesterday's 6.85 percent. But bonds quickly retreated, lifting the yield to 6.87 percent.
The Beige Book will serve as the basis for the Fed's meeting later this month on interest rate strategy. With most economic readings coming in stronger than expected, some analysts expect the central bank to raise its interest rates, slowing the pace of business to forestall a potential acceleration of inflation.
Many investors have been hesitant to act in advance of today's report, as well tomorrow's reading on retail sales activity and Friday's data on inflation at the wholesale level.