Wall Street fell as investors eyed the US government's nonfarm payrolls report on Friday to help adjust their expectations for the path of Federal Reserve interest rate increases this year.
After stronger-than-expected gains in the ADP Research Institute jobs report released on Wednesday, a Labor Department report showed initial claims for state unemployment benefits unexpectedly rose, increasing 6,000 to a seasonally adjusted 278,000 for the week ended February 27.
Separately, the Institute for Supply Management said its index of non-manufacturing activity slipped to 53.4 in February, down from 53.5 in January. Its index of services industries employment fell to 49.7 in February, down from 52.1 the previous month.
Fed Bank of Dallas President Robert Kaplan called for patience when it comes to raising rates.
"While I believe that excessive accommodation carries a cost in terms of distortions and imbalances in hiring, asset allocation and investment decisions, I also believe that, at this juncture, the Fed needs to show patience in decisions to remove accommodation," Kaplan said in a speech in Austin, Texas.
"This is particularly true in light of key global secular trends as well as recent developments relating to slowing global economic growth and tightening financial conditions," Kaplan noted.
Even so, Kaplan is upbeat about the US economy.
"Due to a strong consumer, my own expectation is that the US economy will likely be resilient in 2016," Kaplan said. "Having said that, I believe that recent developments call for patience and further diligence in assessing the impacts of slowing global growth and tighter financial conditions on the US economy."
Wall Street fell. In 1.19pm New York trading, the Dow Jones Industrial Average fell 0.2 per cent, while the Nasdaq Composite Index declined 0.3 per cent. In 1.04pm trading, the Standard & Poor's 500 Index slipped 0.1 per cent.
The Dow moved lower as slides in shares of McDonald's and those of Nike, last down 2.2 per cent and 1.8 per cent respectively, outweighed gains in shares of Caterpillar and those of American Express, last up 2.8 per cent and 1.4 per cent respectively.
"Markets are a little bit nervous about tomorrow's payroll number," John Herrmann, director of US rates strategy at MUFG in New York, told Reuters. "The market is too pessimistic. The number could be really good and if it is people will realise the Fed may raise (rates) over the summer."
In Europe, the Stoxx 600 Index ended the session with a 0.5 per cent drop from the previous close amid disappointing corporate earnings. Germany's DAX Index fell 0.2 per cent, the UK's FTSE 100 Index fell 0.3 per cent, as did France's CAC 40 Index.
Meanwhile, the latest data firmed bets the European Central Bank might add monetary stimulus to help stoke the economy when its policy makers meet next week, on March 10. Yields on Germany's two-year notes fell to a record minus 0.58 per cent.
Markit Economics said its composite purchasing managers index fell to 53 last month, down from 53.6 in January. While that's up from an initial estimate, it's the lowest reading in 13 months.
"The slowdown in growth of business activity, accompanied by a similar easing in the pace of job creation and the steepest fall in prices charged for a year, suggest that the region's recovery is losing momentum," Chris Williamson, chief economist at Markit, said in a statement. "The broad-based disappointment ups the odds of the ECB acting aggressively to avoid another downturn."