U.S. stocks fell for a second consecutive day Thursday in erratic trading after the release this week of key economic reports that delivered mixed signals.

The Dow Jones Industrial Average dropped 173.27 points, or 0.56% to closed at 30,961.82. The S&P 500 fell 44.66 points, or 1.13%, to 3,901.35 and the Nasdaq Composite was down 167.32 points, or 1.43%, to 11,552.36.

The Labor Department reported Thursday that initial jobless claims last week were lower than expected and the Commerce Department reported retail sales were stronger in July than expected.

The news comes as inflation fears ramped up earlier this week. The Federal Reserve's August consumer price index report showed inflation was higher than expected.

"The Fed needs to pick their poison," Mike Loewengart, head of model portfolio construction at Morgan Stanley, told CNBC. "Do you continue strong ahead to tamp down inflation at the risk of recession, at the risk of increasing unemployment? It's truly a dilemma, but I think that given what we have heard from the Fed the focus is squarely on inflation."

Some of the stocks that rose included Apple (AAPL), which closed at $152.37, down $2.94, or 1.89%. Shares of Google's parent company Alphabet (GOOG) fell $1.97, or 1.86%, to close at $302.61.