 "Wall Street lower in wake of air strikes on Yemen")
Oil prices spiked, with Brent crude up 2.4% to $57.86 and U.S. crude up 3% to $50.69 after warplanes from Saudi Arabia and its allies struck Shi'ite Muslim rebels fighting to oust Yemen's president. Halliburton shares gained 1.5% to $44.12.
"Obviously the situation in Yemen is being used as the excuse for this pullback, which is a continuation of yesterday," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
"Whether or not this is the beginning of a correction that could take us down by eight or 10% I'm not sure, but certainly the ingredients for one are in the making."
U.S. stocks had dropped on Wednesday as a slump in technology and biotechs sent the Nasdaq to its biggest decline in nearly a year while the S&P 500 fell through key support levels.
Semiconductor stocks were under pressure for a fourth straight session, after SanDisk cut its first-quarter and 2015 revenue outlook and withdrew its other forecasts for the same time frame. Shares of SanDisk tumbled 15.9% to $68.27 as the worst performer on the S&P 500.
The PHLX semiconductor index was down 3.1% and is down 9.6% for the week.
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The Dow Jones industrial average fell 113.28 points, or 0.64%, to 17,605.26, the S&P 500 lost 11.05 points, or 0.54%, to 2,050 and the Nasdaq Composite dropped 49.05 points, or 1.01%, to 4,827.47.
Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 282,000, the lowest level since mid-February and below the 290,000 estimate, indicating continued strength in the labor market.
At 9:45 a.m. (1345 GMT), the preliminary or "flash" March reading of financial data firm Markit's Purchasing Managers Index on the services sector is scheduled for release.
Lululemon Athletica lost 4.4% to $58.30 after the Canadian yogawear retailer posted quarterly results and forecast earnings and revenue below analysts' expectations.
Consulting and outsourcing company Accenture Plc's quarterly net revenue rose 5%, helped by growth in its outsourcing business as North American companies look to cut costs. Its shares rose 4.4% to $92.05.
Declining issues outnumbered advancing ones on the NYSE by 1,601 to 921, for a 1.74-to-1 ratio; on the Nasdaq, 1,482 issues fell and 618 advanced, for a 2.40-to-1 ratio.
The S&P 500 index posted 2 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 1 new highs and 17 new lows.