The Dow Jones Industrial Average fell 259.86 points, or 0.75 percent, to 34,421.93. The S&P 500 decreased 37.31 points, or 0.86 percent, to 4,320.82. The Nasdaq Composite Index slid 105.28 points, or 0.72 percent, to 14,559.78.
All the 11 primary S&P 500 sectors ended in red, with financials and industrials down 1.96 percent and 1.43 percent, respectively, leading the losses.
U.S.-listed Chinese companies traded lower with all the top 10 stocks by weight in the S&P U.S. Listed China 50 index ending the day on a downbeat note.
The moves came after data showed an unexpected increase of first-time applicants for unemployment benefits in the United States.
U.S. initial jobless claims, a rough way to measure layoffs, increased by 2,000 to 373,000 in the week ending July 3, the Department of Labor reported on Thursday. Economists polled by Dow Jones had expected to see 350,000 initial jobless claimants for last week.
Investors also kept a close eye on a rebound in COVID-19 cases in some parts of the world due to coronavirus variants.