By Riva Gold 

U.S. stocks drifted lower Thursday, with market attention focused on the Federal Reserve's annual meeting at Jackson Hole, Wyo.

Chairwoman Janet Yellen is set to give a speech at the central bankers' conference on Friday. While little guidance on interest rates is expected, investors will be watching for any clues on the course of monetary policy or her assessment of the U.S. economy.

Stocks and the dollar have been locked in a narrow range ahead of the conference, with little else on the earnings or economic calendar to steer direction. Investors are roughly evenly divided on whether the Fed will raise rates in December, but few are expecting a move at the bank's September meeting.

The Dow Jones Industrial Average fell 33 points, or 0.2%, to 18448. The S&P 500 fell 0.1%, and the Nasdaq Composite lost 0.1%.

The Nasdaq Biotechnology index fell 1.1%, extending losses from Wednesday that were sparked by scrutiny over drug prices.

Mylan NV responded Thursday to a backlash over price increases for its EpiPen emergency allergy treatment by promising to reduce the costs that some patients pay, though the drugmaker stopped short of saying it would roll back prices or limit future increases. Mylan shares fell 0.7%.

Quarterly results from Dollar General and Dollar Tree pulled down consumer-discretionary stocks in the S&P 500. Despite benefiting from busier store traffic in past quarters, both companies reported lower-than-expected sales growth Thursday. Dollar General shed 18%, while Dollar Tree lost 9.9%.

Jeweler Tiffany & Co. said sales fell in the second quarter, but it expects sales and earnings to improve in the second half of the year. Tiffany was the top gainer in the S&P 500, rising 6.4%.

Earlier, the Stoxx Europe 600 fell 0.8%. Germany's Ifo index, a key indicator of the economy, fell sharply in August, disappointing expectations for a slight increase.

"Given the relatively large downside surprise in the business climate index, we presume that first negative signs of the U.K.'s decision to leave the European Union are feeding through to the German industry," strategists at Barclays wrote in a note.

The Shanghai Composite Index fell 0.6%, even as China's central bank put more cash into the system through 14-day reverse-repurchase agreements, which are effectively loans to commercial banks.

Australia's S&P ASX 200 fell 0.4% following recent declines in commodities prices.

U.S. crude oil rose 1.2% to $47.33 a barrel after dropping for two of the past three sessions. Gold dropped 0.3% at $1,320.10 an ounce.

Despite the pullback in stocks, both the Dow industrials and the S&P 500 remain near their all-time highs reached last week. Some investors continue to question the rally.

"You can hardly see how you can move up from here," said Fabrice Theveneau, head of global equities at Lyxor Asset Management. While profits so far have been better than feared, companies could come under pressure as wages rise, and the U.S. election could be a source of market turbulence in the fall, he said.

--Daniel Huang contributed to this article.

Write to Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

August 25, 2016 16:22 ET (20:22 GMT)