According to preliminary results, the Dow Jones industrial average closed down 5.46, or 0 percent, at 10,168.46.

Broader stock indicators were narrowly higher. The Standard & Poor's 500 index rose 1.67, or 0.2 percent, to 1,105.91. The tech-focused Nasdaq composite index gained 12.31, or 0.7 percent, to finish at 1,850.41.

The first rise in oil prices after seven sessions of declines added an element of gloom to a market already made sluggish by lackluster trading. Government data showed a steep drop in U.S. oil inventories last week as imports fell and refiners continued to operate at unusually high rates, sending light crude for October delivery soaring $1.78 to $43.90 on the New York Mercantile Exchange.

Underscoring how exaggerated market moves can be when volume is light, the major indexes sank at midday on reports of a possible terror attack in Washington, D.C. The market stabilized after it became clear the incident stemmed from the accidental release of pepper spray in a restaurant near the World Bank and International Monetary Fund.

"When you combine the rise in oil prices with the false-alarm bioterrorist alert, both of those events really took the steam out of the market," said Michael Sheldon, chief market strategist at Spencer Clarke LLC.

The markets were slow to react to the Institute for Supply Management's manufacturing index for August. Manufacturing activity rose for the 15th consecutive month, suggesting healthy activity in the sector, but the reading of 59 was three points lower than the one recorded for July, and fell short of economists' expectations.

Many market participants were looking ahead to Friday, when the Labor Department was to release its data for August. After two months of anemic employment growth, Wall Street is hoping for a stronger labor market.

"The market really needs to see some positive economic statistics, and we haven't been getting them lately," said Brian Williamson, an equity trader at The Boston Company Asset Management. "The next few days are going to be critical to see where we stand, and to see whether or not we're in an economic soft patch ... or if we're in a slump."

Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange.