Equities on both sides of the Atlantic moved lower before the Easter long weekend.
"The outlook for most investors is caution," Amir Madden, portfolio manager at asset management firm GAM in New York, told Reuters.
US Federal Reserve Bank of St Louis President James Bullard warned that the next interest rate increase "may not be far off provided the economy evolves as expected." Bullard made the comments in prepared remarks for the New York Association for Business Economics.
Traders are pricing in an 8 per cent chance for an April hike and about 39 per cent probability for an increase at the Fed's June meeting, according to Bloomberg.
The latest data offered further evidence of a solid US jobs market. A Labor Department report showed that initial claims for state unemployment benefits increased 6,000 to a seasonally adjusted 265,000 for the week ended March 19.
"With a tighter jobs market, more people are looking for work and employers are raising wages, both good news for consumer spending and the overall economy in 2016," Gus Faucher, deputy chief economist at PNC Financial Services in Pittsburgh, told Reuters.
Manufacturing remains a different story. A Commerce Department report showed orders for durable goods, items meant to last at least three years, fell 2.8 per cent in February, following a 4.2 per cent gain in January.
Wall Street fell. In 1.24pm New York trading, the Dow Jones Industrial Average declined 0.4 per cent, while the Nasdaq Composite Index slid 0.3 per cent. In 1.08pm trading, the Standard & Poor's 500 Index fell 0.4 per cent.
"The market is seeing a little bit of a pause in momentum," Kevin Caron, a Florham Park, New Jersey-based market strategist and portfolio manager at Stifel Nicolaus & Co, told Bloomberg. "Now we're looking ahead at what drives us beyond what central-bank actions have been able to curry so far. We don't really have a catalyst right now."
Slides in shares of Boeing and those of Goldman Sachs, down 1.6 per cent and 1.5 per cent respectively in afternoon trading, led the decline in the Dow.
Shares of Wells Fargo fell, last 2.2 per cent weaker at US$48.67, after UBS analyst Brennan Hawken initiated coverage of the stock with a "sell" rating and price target of US$45.
"We see risks to [Well Fargo's] revenue growth and credit performance, which coupled with a valuation on the high end of peers and consensus estimates that have not come down much, puts WFC shares at risk of underperformance in our view," wrote Hawken, according to the Wall Street Journal.
Europe's Stoxx 600 Index ended the day with a 1.5 per cent drop from the previous close, bringing its fall for the holiday-shorted week to 1.9 per cent.
The UK's FTSE 100 Index retreated 1.5 per cent, Germany's DAX Index fell 1.7 per cent, while France's CAC 40 Index shed 2.1 per cent.