By Anna Isaac and Juliet Chung

U.S. stocks declined Thursday, hurt by weakness in the labor market as uncertainty over the coronavirus pandemic continues to weigh on hiring.

The S&P 500 dropped 0.5% to 3368, suggesting that the benchmark may fall for a second day. The Nasdaq Composite fell around 1%, pushing the tech-heavy index further into negative territory for the month. The Dow Jones Industrial Average, which rose yesterday, dropped 0.2%, or 48 points, in early trading.

In data released before the opening bell, filings for jobless benefits held nearly steady at 860,000 last week, according to the Labor Department. The measure has shown stabilization at just below 900,000 in recent weeks. Layoffs remain elevated despite some signs of a broader labor-market recovery.

Further weighing on trading were comments on Wednesday from Federal Reserve Chairman Jerome Powell, who said that the economic outlook is "highly uncertain." Policy makers indicated concern that easy gains from reopening the economy could mask deeper scars among the most vulnerable businesses, with people likely to face longer spells of joblessness. The central bank also signaled that interest rates would stay near zero until 2023.

"The Fed said it would keep rates low for ages. But that's not enough," said James Athey, senior investment manager at Aberdeen Standard Investments. "Not taking away is no longer sufficient for this market. You need to do more, more, more."

Vivian Lau, founder of New York hedge fund One Tusk Investment Partners, said while the Fed's accommodative stance boded positively for assets to gain value in the long term, the stock market in the near-term was likely to move in fits and starts.

"You need fiscal policy to come through, you need economic results to come through and we need to come through the pandemic. And on all three fronts it's improved from where we were in the spring and we're in a better place than where we were in May, but it's still not where we were before March. The fundamental economics are still not there yet."

Investors who had been counting on a vaccine to curtail the coronavirus outbreak and allow the economic recovery to pick up pace were also troubled by conflicting comments about the availability of a vaccine.

A top Trump administration health official predicted that a Covid-19 vaccine may not be available to the general public until next summer, but his comments were quickly disputed by President Trump. The director of the U.S. Centers for Disease Control and Prevention, Robert Redfield, said the vaccine would be in "very limited supply" at the end of the year. Mr. Trump said a vaccine would be distributed to the general public immediately.

Separately, Mr. Trump urged congressional Republicans to seek a bigger and more expensive package of coronavirus relief aid. But his comments drew a cool reception from some GOP lawmakers skeptical of a growing price tag.

"There's fatigue on the fiscal and policy front. The Fed didn't take any new steps and no deal has passed Congress," said James McCormick, a strategist at NatWest Markets. "There are signs of a fiscal cliff emerging," he warned, and pointed toward the high number of Americans drawing on unemployment support.

In the bond market, the yield on the benchmark 10-year U.S. Treasury edged down to 0.647%, from 0.686% Wednesday.

Overseas, the Stoxx Europe 600 fell 1%, with losses led by the technology, banking and mining sectors.

The British pound fell 0.6% against the U.S. dollar and 0.5% against the euro after the Bank of England left interest rates unchanged.

In Asia, major equity benchmarks fell by the close of trading. Japan's Nikkei 225 ticked down 0.7%, while Hong Kong's Hang Seng Index dropped 1.6%.

In commodities, gold fell 1.5% to $1,941.30 a troy ounce.

Write to Anna Isaac at anna.isaac@wsj.com and Juliet Chung at juliet.chung@wsj.com