The Dow Jones industrial average fell 1.15 to 6,944.70, having surrendered a 42-point gain.
Advancers outnumbered decliners by a narrow margin on the New York Stock Exchange, with 1,276 up, 1,214 down and 851 unchanged. NYSE volume totaled 522.48 million shares vs. 528.81 million yesterday.
The Standard & Poor's 500-stock list fell 3.40 to 798.59, and the NYSE's composite index fell 0.43 to 420.24. The Nasdaq composite index fell 13.66 to 1,315.43, and the American Stock Exchange index fell 0.57 to 600.31.
Technology and smaller-company issues had the biggest losses.
Bonds pulled back from yesterday's gains amid news that orders to U.S. factories posted unexpectedly strong gains in January and the number of first-time claims for jobless benefits plunged last week, pushing the four-week average to an eight-year low.
Other recent reports of economic strength have fed fears that the Federal Reserve will raise its key lending rates to slow things down before inflation has a chance to accelerate.
The robust economic readings come a day before tomorrow's report on February payroll and wage levels, a key force behind production costs and inflation. The monthly employment tally has repeatedly exceeded forecasts over the past year, aggravating inflation worries and sending interest rates soaring in the bond market. When the February employment report was released last March 8, the Dow tumbled 171 points.
As bond prices fell today, the yield on the 30-year Treasury bond rose as high as 6.88 percent, up from 6.82 percent late yesterday, before settling at 6.87 percent.
Higher inflation makes fixed-income investments like bonds less attractive, forcing down prices to improve their yield. Higher interest rates at the Fed or the bond market can hurt stocks by slowing consumer borrowing and spending.