A decline on Wall Street on Thursday, with bank stocks driving all three major stock indices lower as investors were concerned that a strong employment report on Friday might prompt the Federal Reserve to raise interest rates aggressively.

Stocks had climbed earlier in the day as statistics revealed that last week's increase in jobless claims was the highest in five months. This raised some expectations for eased labour market, which might tame inflation.

Following January's shocking 517,000 figure, which first caused markets to reevaluate their expectations for U.S. interest rates, the February non-farm payrolls report is predicted to indicate that payrolls increased by 205,000 last month.

The Dow Jones Industrial Average dropped by 304.59 points, or 0.93%, to 32,493.81, the S&P 500 slipped 45.32 points, or 1.14%, to 3,946.69 and the Nasdaq Composite dipped158.94 points, or 1.37%, to 11,417.07.

With S&P banks plunging more than 6%, the financial sector was the greatest drag on the S&P 500, down 3.4%, putting it on pace to experience its biggest one-day percentage down since June 2020.