Oil prices dropped more than 3 percent on Wednesday following a surprise increase in gasoline inventories, and declines in energy shares weighed on U.S. stocks, Reuters reported.
The dollar recovered from recent weakness against the euro EUR= and the safe-haven yen JPY=, and sterling was off six-month highs, which it hit after Tuesday's calling of a snap UK election.
In the oil market, the counter-seasonal build of 1.5 million barrels in gasoline in the latest week, along with an increase in U.S. production, pressured prices.
Brent crude futures LCOc1 were down 3.6 percent at $52.89, while U.S. crude futures CLc1 fell 3.8 percent to settle at $50.44.
The oil losses hurt shares of U.S. energy companies, pushing the S&P 500 energy index .SPNY down 1.4 percent and helping the benchmark index to reverse earlier gains.
"Crude broke $52 on WTI, that is the strongest correlation we have right now away from the case-by-case earnings we have," said Art Hogan, chief market strategist at Wunderlich Securities in New York.
The Dow Jones Industrial Average .DJI was down 104.72 points, or 0.51 percent, to 20,418.56, the S&P 500 .SPX lost 3.27 points, or 0.14 percent, to 2,338.92 and the Nasdaq Composite .IXIC added 17.11 points, or 0.29 percent, to 5,866.58.
Limiting losses were upbeat earnings from Morgan Stanley (MS.N) and others.
Questions still hung over the 'reflation' trades that had lifted markets since Donald Trump became U.S. president. A run of disappointing U.S. economic data and doubts the Trump administration will progress with tax cuts have quelled expectations of faster inflation.
The pan-European STOXX 600 index , which hit a three-week low on Tuesday, ended up 0.2 percent, while Britain's FTSE 100 .FTSE index fell 0.5 percent.
British stocks are vulnerable to a rising pound because more than two-thirds of FTSE 100 company earnings are derived from operations overseas.
Sterling was just off a six-month peak against the dollar above $1.28 GBP=D3 having surged when British Prime Minister Theresa May called an early general election for June 8, seeking to strengthen her party's majority ahead of Brexit negotiations.
The greenback was 0.3 percent higher against the yen and up 0.1 percent against the euro.
Four days before the first round of the presidential election in France, just a few points separate the top four candidates, including two who oppose the euro - the far-right's Marine Le Pen and the far-left's Jean-Luc Melenchon.
In the U.S. Treasury market, 10-year notes US10YT=RR were down 6/32 in price to yield 2.20 percent.
Gold slipped as the dollar gained, with spot gold XAU= falling as low as $1,275.73 per ounce.