The Dow Jones Industrial Average fell 142.62 points, or 0.46 percent, to 30,630.17. The S&P 500 decreased 11.40 points, or 0.30 percent, to 3,790.38. The Nasdaq Composite Index increased 3.61 points, or 0.03 percent, to 11,251.19.
Eight of the 11 primary S&P 500 sectors ended in red, with financials and energy down 1.92 percent and 1.9 percent, respectively, leading the laggards. Technology rose 0.93 percent, the best-performing group.
JPMorgan Chase reported second-quarter financial results on Thursday that were well below analyst expectations, sending the stock down more than 3 percent.
Shares of Morgan Stanley also dipped after the company delivered quarterly results that missed analysts' estimates.
Bank earnings continue on Friday with Wells Fargo and Citigroup on deck to deliver.
Meanwhile, investors bet on a more aggressive Fed rate hiking cycle after data showed U.S. inflation accelerated to a fresh 40-year record.
The U.S. consumer price inflation increased 9.1 percent year over year in June, up from May's rate of 8.6 percent and the highest level since November 1981, the Labor Department reported Wednesday.
"Markets are likely to remain volatile in the coming months and trade based on hopes and fears about economic growth and inflation," UBS analysts said Thursday in a note.
"A more durable improvement in market sentiment is unlikely until there is a consistent decline both in headline and in core inflation readings to reassure investors that the threat of entrenched price rises is passing," they added.
On the economic front, U.S. initial jobless claims, a rough way to measure layoffs, rose by 9,000 to 244,000 in the week ending July 9, the Labor Department said Thursday. Economists polled by The Wall Street Journal had estimated new claims would total 234,000.
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