US stocks killed off a three-day rally and slumped at the open on Thursday while European shares lagged, oil fell and traders fretted about the world's biggest economy after underwhelming US weekly jobless claims data.
The latest data showing claims for state aid among jobseekers reinforced the dismal non-farm payrolls data last Friday. Moreover, the prospect of a Fed rate hike in June is now zero while that for a July has halved since the payrolls numbers and stands at around 18% chance.
Banking stocks were bruised by the lack of a rate hike, while utilities which are rate-hike sensitive were higher as a sector on Thursday.
The bearish sentiment was not aided by more disappointing data out of China overnight as inflation grew less that had been expected.
The market bellwether S&P 500 was down 0.5% at 2,109 and led south by NRG Energy (NYSE:NRG).
The S&P Midcap 400 was down 0.6% at 1,516 and led by Restoration Hardware Holdings, Inc (NYSE:RH) and Denbury Resources (NYSE:DNR).
Meanwhile, the S&P Smallcap 600 was 0.9% lower at 720 and led by Home Bancshares Inc (NYSE:HOMB).
Oil prices were also lower, having been a huge part of the bourse rally this week. The WTI was down 1.44% at $50.49 as a strong dollar sparked profit-taking in crude futures by investors.
Continuous threats by militants against Nigeria's oil industry and fear of more security incidents that could hit supplies worldwide, however, curbed losses in crude.