The Dow Jones Industrial Average decreased 153.07 points, or 0.46 percent, to 32,862.30. The S&P 500 lost 58.66 points, or 1.48 percent, to 3,915.46. The Nasdaq Composite Index shed 409.03 points, or 3.02 percent, to 13,116.17.
Ten of the 11 primary S&P 500 sectors ended in red, with energy and technology down 4.68 percent and 2.85 percent, respectively, leading the laggards. Financials rose 0.56 percent, the lone gaining group.
U.S.-listed Chinese companies traded mostly lower with nine of the top 10 stocks by weight in the S&P U.S. Listed China 50 index ending the day on a downbeat note.
Investors rushed to dump highflying stocks, especially tech names, amid a spike in bond yields. The yield on the benchmark 10-year U.S. treasury, a crude proxy for inflation expectations, on Thursday broke above 1.7 percent for the first time since January 2020. The 30-year treasury yield briefly topped 2.5 percent.
On Wednesday, the U.S. Federal Reserve left its easy monetary policy stance in place. The central bank kept its benchmark interest rate unchanged at the record-low level of near zero, as inflation debate heats up, driven by COVID-19 vaccination progress and the latest relief package.
"Following a moderation in the pace of the recovery, indicators of economic activity and employment have turned up recently, although the sectors most adversely affected by the pandemic remain weak," the Fed said in a statement after concluding its two-day policy meeting.
Noting that inflation continues to run below 2 percent, the Federal Open Market Committee (FOMC), the Fed's policy-making body, reaffirmed that it will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent.
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