The Dow Jones Industrial Average plunged 638.11 points, or 1.94 percent, to 32,272.79. The S&P 500 decreased 97.95 points, or 2.38 percent, to 4,017.82. The Nasdaq Composite Index dropped 332.05 points, or 2.75 percent, to 11,754.23.
All the 11 primary S&P 500 sectors ended in red, with communication services and technology down 2.75 percent and 2.72 percent, respectively, leading the losses.
The U.S. Department of Labor reported on Thursday that the nation's jobless claims, a rough way to measure layoffs, increased by 27,000 to 229,000 in the week ending June 4. Economists polled by The Wall Street Journal had forecast initial jobless claims to total 195,000.
Investors are waiting for the May U.S. consumer price index report due on Friday, as inflation, interest rates and their potential impact on the economy remain the chief concerns on Wall Street.
The Federal Reserve raised interest rates by 50 basis points in May and signaled more hikes ahead in an effort to combat surging inflation.
With the Fed getting aggressive on rates, some have worried that it could tip the economy into recession.
"The recession argument is centered on inflation and the ratcheting up of interest rates to the point of slowing the economy down into a contraction," Kevin Matras, executive vice president at Zacks Investment Research, said Thursday in a note.
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