US Stock Market: Dow Jones crashes 544 points to close at 4-month low; Nasdaq tumbles more than 2%

US Stock Market: Wall Street's three major stock indexes closed lower on Thursday, with bank stocks creating the biggest drag. The S&P 500 slid 73.69 points, or 1.85 per cent, at 3,918.32 and the Nasdaq Composite dropped 237.65 points, or 2.05 per cent, to 11,338.36. Thursday’s losses brought the Dow Jones Industrial Average to 32,254.86 to 4-month low as it fell 543.54 points, or 1.66 per cent.

SVB Financial Group fuelled sell-off during Thursday's session as it announced a $1.75 billion share sale to shore up its balance sheet. This sparked a broad sell-off as investors prepared for the Labor Department's hotly anticipated February jobs data, expected before the bell on Friday.

Tom Hainlin, national investment strategist at U.S. Bank Wealth Management in Minneapolis, calling it a "challenging situation", said, "Investors are positioning cautiously ahead of tomorrow's payrolls report."

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"A strong jobs report could be perceived by investors that the economy is still strong and the Fed needs to be more aggressive," he said.

The dollar backed off a near three-month high, gold advanced and benchmark U.S. Treasury yields eased as economic data took some of the sting out of Fed Chairman Jerome Powell's hawkish, two-day congressional testimony.

Data released on Thursday showed U.S. jobless claims rose 11 per cent last week - the largest increase in five months - while planned layoffs for February jumped four-fold, year-on-year.

Any signs of cracks in the tight labor market is good news as far as the Fed is concerned.

A clearer picture on whether the job market is softening is expected on Friday in the Labor Department's February employment report. Analysts expect the U.S. economy to have added 205,000 jobs last month - a sharp deceleration from January - and see the unemployment rate holding firm at 3.4 per cent.

At last glance, financial markets have priced in a 63 per cent likelihood of a larger, 50 basis point increase to the Fed funds target rate this month, according to CME's FedWatch tool.

European stocks ended modestly lower, dragged down by higher-for-longer interest rate worries.

The pan-European STOXX 600 index (.STOXX) lost 0.22 per cent and MSCI's gauge of stocks across the globe (.MIWD00000PUS) shed 1.23 per cent.

Emerging market stocks lost 1.10 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), closed 0.91 per cent lower, while Japan's Nikkei (.N225) rose 0.63 per cent.

Treasury yields eased in the wake of the jobless claims data. Benchmark 10-year notes last rose 15/32 in price to yield 3.9169 per cent, from 3.976 per cent late on Wednesday. The 30-year bond last rose 3/32 to yield 3.8712 per cent, from 3.877 per cent late on Wednesday.

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The greenback, which rose to a near three-month high during Powell's testimony, pulled back against a basket of currencies after the jobless claims data. The dollar index fell 0.38 per cent, with the euro up 0.32 per cent to $1.0578.

The Japanese yen strengthened 0.89 per cent versus the greenback at 136.14 per dollar, while sterling was last trading at $1.1921, up 0.67 per cent on the day.

Oil prices erased earlier gains to head lower over looming worries of softening demand in the face of a possible recession.

U.S. crude fell 1.23 per cent to settle at $75.72 per barrel, and Brent settled at $81.59 per barrel, down 1.29 per cent on the day.

Gold jumped on hopes that the Fed would dial down its aggressive inflation battle. Spot gold added 1.0 per cent to $1,831.50 an ounce.

(with Reuters inputs)