At the close, the Dow Jones Industrial Average fell 140.46 points, or 0.52 per cent, to 27,046.23. The S&P 500 dropped 9.21 points, or 0.30 per cent, to 3,037.56. The Nasdaq Composite Index erased 11.62 points, or 0.14 per cent, to 8,292.36, Xinhua reported.
Nine of the 11 primary S&P 500 sectors dipped, with industrials and materials down 1.14 per cent and 1.10 per cent, respectively, leading the laggards.
On the data front, the Chicago Purchasing Managers Index (Chicago PMI), also known as Chicago Business Barometer, fell 3.9 points to 43.2 in October, marking the lowest level since December 2015 and pointing to further weakness in business activity.
The Chicago PMI is considered to be one of the leading indicators of the US economy. Values above 50.0 indicate expanding manufacturing activity.
Meanwhile, in the week ending October 26, US initial jobless claims, a rough way to measure layoffs, stood at 218,000, an increase of 5,000 from the previous week's revised level, the Department of Labor reported on Thursday. Economists polled by MarketWatch estimated new claims would total a seasonally adjusted 215,000.
Political uncertainty also weighed on the market.
The US House of Representatives voted on Thursday to approve a resolution designed to formalize proceedings of the impeachment inquiry into Trump.
The resolution, unveiled earlier this week by the House Rules Committee, establishes procedures for public impeachment hearings and the release of deposition transcripts, and outlines the House Judiciary Committee's role in considering potential articles of impeachment.
Thursday's market movement followed a key decision from the Federal Reserve. The US central bank on Wednesday lowered interest rates by 25 basis points amid a further slowdown in US economic growth.
The Federal Open Market Committee, the Fed's rate-setting body, trimmed the target for the federal funds rate to a range of 1.5 per cent to 1.75 per cent after concluding its two-day policy meeting, largely in line with market expectation.
( With inputs from IANS )