Treasuries rose and the dollar was flat, putting it on track for a fourth straight week of declines.
All major equity indexes were lower, with the S&P 500 Index being dragged down by clothing makers and retail.
CHINA-US TRADE: The latest round of trade negotiations between the world's two largest economic powers have now concluded, but investors were cheered when they learned the two-day talks would be extended. Trump tweeted on Tuesday morning as the countries wrapped up the meetings. However, other reports indicated that the two weren't closing in on a trade deal.
In Asia, the MSCI Asia Pacific index and the MSCI China index rose slightly. Meanwhile, European shares shrugged off unexpectedly weak German industrial production numbers and worsening euro-area consumer confidence to climb on strength among retailers and carmakers. The common currency remained lower after the data.
Asian markets were mostly lower Thursday as US and Chinese officials wrapped up three days of talks in Beijing without significant breakthroughs. And in Europe, machinations over Brexit continue. "Traders are still very much aware that the various geopolitical factors that have been so prevalent in influencing market moves over the last 12 months are still relevant".
-Wednesday sees the release of minutes from the Federal Reserve's December 18-19 policy meeting.
But to equity investors, Powell's cryptic comments at the Economic Club of Washington, D.C. about returning the Fed's balance sheet to a normal level - which were taken to mean that the central bank will be reducing it aggressively in the near future - were the attention grabber.
Fed Chairman Powell will speak to the Economic Club of Washington D.C. on Thursday.Britain's Parliament this week resumes a debate on the Brexit withdrawal bill, with Prime Minister Theresa May seeking to avoid defeat in a vote set for the week of January 14.
StocksThe S&P 500 Index was down 0.7% at 9:39 a.m.in NY, the first retreat in a week.
-The Stoxx Europe 600 index advanced 0.9 percent to the highest in three weeks. Japanese stocks paced declines across many Asian markets, although the MSCI Asia Pacific Index declined as China inflation figures showed slowing growth.
Germany's DAX Index lost almost 0.2 percent.
The euro fell 0.3 percent to $1.1466.
Investors may well be catching their breath after recent rapid gains, while the lack of any concrete details from trade discussions between China and the USA meant there was no fresh catalyst to sustain momentum.
The Japanese yen rose less than 0.05% to 108.16 per dollar, the strongest in a week. Germany's DAX Index declined 0.2%. The MSCI Emerging Market Index jumped 0.3% to the highest in five weeks.
The yield on 10-year Treasuries tumbled five basis points to 2.6954 percent, the biggest fall in more than a week. Japan's Nikkei 225 index gained 1.1 percent and the Hang Seng in Hong Kong rallied 2.3 percent.
Germany's 10-year yield la upward momentum and lost two basis points to 0.26 percent, the first drop in a week and the biggest decrease in more than a week.
The safe haven is back for the Dollar Spot Index and it climbed 0.1 percent.
West Texas Intermediate crude decreased 1.4 percent to $51.63 a barrel, the first retreat in two weeks.Gold fell 0.1 percent to $1,292.89 an ounce.
The British pound has no clue what to do and it dropped 0.2 percent to $1.2759.
-With assistance from Cormac Mullen, Haidi Lun, Richard Frost, Andreea Papuc, Adam Haigh and Fergal O'Brien. Once confirmed, you'll start receiving the daily headlines every morning at 6:15 am!