Wall Street tumbled on Thursday, mirroring a slump in global financial markets, as US Treasury yields surged to multi-year highs on robust economic data and on upbeat comments from the Federal Reserve, sparking fears of accelerating inflation.

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The Dow Jones Industrial Average dropped for the first time in six days and, along with the benchmark S&P 500, was on pace for its biggest one-day drop since late June. The Nasdaq fell nearly 2 percent, dragged down by a drop in heavyweight stocks.

Ten of the 11 major S&P sectors were lower. The communication services sector sagged 1.4 percent, with Alphabet and Netflix dropping more than 2 percent each, while Facebook sliding 1.6 percent.

Technology stocks declined 1.3 percent and were the biggest drag on the markets. Apple fell 1 percent.

The yield on the benchmark 10-year note was perched at seven-year high as strong economic data on Wednesday raised expectations that the non-farm payrolls report due out on Friday morning would come in stronger than anticipated.

Of particular interest will be the wage growth for September, especially in the light of Amazon.com raising its minimum wage to $15 earlier this week.

"I will be more interested in the wage growth figure as another surprise to the upside will fuel expectations that inflation will run above the targeted 2 percent and the Fed may need to tighten policy faster than previously projected," said Hussein Sayed, chief market strategist at FXTM.

The only pocket of growth in the market was the financial sector as the yield curve – the spread between two- and 10-year yields – steepened to a two-month high.

Bank stocks jumped 1.2 percent, outstripping the 0.9 percent rise in the overall financial sector.

At 12:01 a.m. EDT the Dow was down 263.60 points, or 0.98 percent, at 26,564.79, the S&P 500 was down 26.99 points, or 0.92 percent, at 2,898.52 and the Nasdaq Composite was down 134.84 points, or 1.68 percent, at 7,890.24.

Despite the pullback, U.S. stocks are trading near record levels, raising concerns about valuations with the earnings season just around the corner.

"Yields are giving the markets a chance to take a breather at very high levels. I think we will have a defensive, bumpy session going into Friday's unemployment data," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

Among gainers, Constellation Brands shares jumped 3.4 percent after the Corona beer maker raised its full-year profit forecast and topped Wall Street's estimates for second-quarter sales and profit.

Eli Lilly rose 3.6 percent after the company's experimental diabetes drug showed promise in a mid-stage trial.

Declining issues outnumbered advancers for a 3.80-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 2.89-to-1 ratio on the Nasdaq.

The S&P index recorded 8 new 52-week highs and 13 new lows, while the Nasdaq recorded 20 new highs and 62 new lows.