The Dow Jones Industrial Average and the broad-based S&P 500 index both lost 1.7 percent, while the tech-heavy Nasdaq Composite Index fell 2.3 percent.
The US government is reopening after a six-week shutdown, and Wall Street is now bracing for the market impact as economic data begins to be released again.
There is concern that the reports could lead to the US Federal Reserve refraining from lowering its key interest rate.
The AI sector continues to worry investors. Index-heavy chip giant Nvidia fell 3.6 percent while industry peer AMD fell 4.2 percent. Broadcom and Palantir lost 4.3 and 6.5 percent, respectively.
Electric car manufacturer Tesla fell 6.6 percent. On Thursday, it was reported that the company is recalling 10,500 units of its Powerwall 2 battery system due to a fire risk, Reuters reports.
Entertainment group Disney presented its financial results, but the figures did not impress investors, and the company fell 7.8 percent.
Networking giant Cisco reported better-than-expected profit and revenue after the stock market closed on Wednesday. The stock rose 4.6 percent on Thursday.
