Wall Street fell from record highs, while the US dollar gained, as another Federal Reserve official boosted bets the central bank will raise interest rates at its meeting this month.
A Labour Department report showed initial claims for state unemployment benefits fell 19,000 to a seasonally adjusted 223,000 for the week ended February 25, the lowest level since March 1973.
"We are closing in on full employment, inflation is moving gradually toward our target, foreign growth is on more solid footing, and risks to the outlook are as close to balanced as they have been in some time," Fed Governor Lael Brainard said in prepared remarks for a speech on Wednesday. "Assuming continued progress, it will likely be appropriate soon to remove additional accommodation, continuing on a gradual path."
Traders are now pricing in a 90 per cent chance of a rate increase at the March 15 decision, Fed fund futures showed, according to Bloomberg.
Fed Chair Janet Yellen is slated to speak on Friday.
Wall Street slid. In 1.20pm trading in New York, the Dow Jones Industrial Average fell 0.3 per cent, while the Nasdaq Composite Index shed 0.6 per cent. In 1.05pm trading, the Standard & Poor's 500 Index slid 0.4 per cent.
"It seems like after yesterday's surge, there is no real news out there this morning and it is almost like the market's simply taking a breather," Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina, told Reuters.
Declines in shares of Caterpillar and those of Microsoft, recently down 5.6 per cent and 1.6 per cent respectively, led the Dow lower.
Caterpillar had its offices raided by law enforcement officials. Searches were conducted Thursday in Peoria, East Peoria and Morton by the Internal Revenue Service, the Federal Deposit Insurance Corp and the Commerce Department, Sharon Paul, a spokeswoman for the US attorney's office for the Central District of Illinois, told Bloomberg. Paul said she couldn't provide details on the nature of the raid.
"Law enforcement is present in various Peoria-area Caterpillar facilities executing a search warrant," Caterpillar said in a statement, according to media reports. "Caterpillar is cooperating."
Shares of Kroger slid after the largest grocery-store chain in the US posted an unexpected decline in same-store sales for the fourth quarter.
"With peers Ahold Delhaize, Walmart and Publix reporting better comparable sales than Kroger, it is becoming increasingly likely that the company is losing overall market share," JP Morgan analyst Ken Goldman said, according to Reuters.
"We are disappointed in the comparable number and are starting to wonder how Kroger will get anywhere near its long-term outlook for 8-11 per cent earnings per share growth in today's environment," Goldman noted.
Shares of Kroger traded 3.2 per cent weaker as of 11.55am in New York.
Bucking the trend, shares of Snap jumped in their first day of trading. The owner of Snapchat traded at US$25.33, 49 per cent higher than its US$17 offering price.
"The environment is terrific. Animal spirits are running through the streets here. What better time to price," Stephen Massocca, senior vice president at Wedbush Securities, told Reuters.
In Europe, the Stoxx 600 Index finished the day with a decline of less than 0.1 per cent from the previous close.The UK's FTSE 100 Index inched 0.01 per cent lower, while France's CAC 40 Index slipped 0.1 per cent.
Germany's DAX Index eked out a 0.1 per cent gain.
Shares of Anheuser-Busch InBev closed 2.5 per cent weaker in Brussels after the brewer posted another quarter of disappointing earnings.
It's "another shocker, but that's the trough," wrote Eamonn Ferry, an analyst at Exane BNP Paribas, according to Bloomberg. "We had feared the worst this quarter, and so it is. There may well be an element of kitchen-sinking here."