U.S. stocks retreated slightly in afternoon trade Thursday, with major indexes experiencing up-and-down action, as a retrenchment in internet and technology shares offset gains in the energy sector.

What are markets doing?

The Dow Jones Industrial Average slipped 27 points, or 0.1%, to 24,741. The S&P 500 index traded little up less than 0.1% at 2,722, with the energy sector gaining 1.2%, representing the best performer among the broad-market benchmark’s 11 sectors. The Nasdaq Composite Index declined by 9 points to 7,389, a fall of 0.1%.

The S&P 500’s defensive sectors continued to struggle, with utilities down 0.7% and real estate off 0.3%. These industries have struggled amid the rise in bond yields, as higher bond yields make the higher-than-average dividend yields of these companies less attractive to income-seeking investors.

Among the weakest sectors of the day was technology, which fell 0.3% after Cisco reported its results.

Meanwhile, the small-cap benchmark Russell 2000 index rose 0.6% on the day, moving further into record territory.

What’s driving the market?

A continued rise in bond yields remained in focus. The yield on the 10-year Treasury note was steady near a 7-year high at 3.1%. A move above 3% has been cited as a psychologically significant level that could make equities appear less attractive.

Also in the foreground was uncertainty pertaining to trade policy. A second round of U.S.-China trade talks was set to begin in Washington on Thursday, which comes amid a running standoff between the two countries over tariffs. President Donald Trump said last weekend, he would try to help telecom group ZTE from going under as it has been targeted by a U.S. ban, but then said in tweets on Wednesday that he wasn’t caving to any demand from China over that company.

Meanwhile, questions are lingering over another geopolitical front—North Korea—after Pyongyang signaled a day earlier that Kim Jong Un might pull out of next month’s summit with Trump if the U.S. insists on denuclearization for the isolated nation.

What are strategists saying?

“Interest rates and bond yields are the elephant in the room for equity markets. As they move higher, equities will become increasingly volatile, especially since valuations are stretched and on the high side,” said Bill Kornitzer, portfolio manager at Buffalo Funds, which has about $7.5 billion in assets.

“At the same time, the backdrop for the economy, both in the U.S. and globally, remains in pretty good shape. This has become something of a stock picker’s market, and right now the momentum is in energy because of tensions in the Middle East and dropping stockpiles.”

What data are in focus?

Initial jobless claims rose by 11,000 to 222,000 in the latest week, the highest level in a month, although they were still near multidecade lows. The Philadelphia Fed manufacturing index came in at 34.4 in May, surging past expectations for a reading of 21.

What stocks are in focus?

In the energy sector, Chevron Corp. rose 0.6% while Occidental Petroleum Corp. was up 1.3% and Marathon Oil Corp. gained 1.8%. The group was supported by a 0.7% rise in the price of crude oil, which is up almost 20% this year.

The Energy Select Sector SPDR ETF jumped 1.6% and was on track for its highest close since June 2015. The fund is on track for its 10th straight gain.

Cisco Systems Inc. was down 2.7% after services revenue at the networking giant fell short of Wall Street expectations, in earnings late Wednesday. The stock, a Dow component, looked to be one of the biggest drags on the overall market.

Walmart Inc. fell 1.2% after the retailing giant posted an earnings and sales beat. The discount retailer is also a Dow component.

J.C. Penney Co. Inc. slumped 11% after reporting a drop in first-quarter sales and cutting its outlook.

Childrens Place Inc. fell 8% after earnings took a hit from unseasonably cold weather.

Minerva Neurosciences Inc. rose 12% after reporting positive results from a drug trial.

Hasbro Inc. rose 1% after it added $500 million to it stock buyback program.

Shares of Williams Companies rose 1% after the natural gas infrastructure company said it would buy the outstanding common shares of Williams Partners LP in a deal valued at $10.5 billion. Williams Partners shares rose 6%.

Blue Apron jumped 6.3% after it named a new chief financial officer.

What are other markets doing?

Asian markets finished mostly lower, while European stocks seesawed with Italian politics and earnings in focus.

Gold futures slipped 0.1%, while the ICE U.S. Dollar Index inched up, while oil futures fell 0.2% to $71.35 a barrel.

—Barbara Kollmeyer contributed to this article