On the economic front, weekly jobless claims declined 12,000 to a seasonally adjusted 334,000 last week, according to the Labor Department, falling near the lowest level in nearly five years. Economists polled by Reuters expected a decline of 1,000. The four-week moving average dropped 7,250 to 345,250.
Retail sales climbed 0.6 percent in May, according to the Commerce Department, topping expectations for a gain of 0.4 percent after edging up just 0.1 percent in the month prior. Retail sales account for about 30 percent of consumer spending.
Meanwhile, import and export prices declined unexpectedly in May.
Earlier, Japan's benchmark Nikkei plunged over 6 percent. The index has tumbled more than 20 percent from last month's 5 1/2-year high of 15,942, pushing the benchmark firmly back in bear market territory for the second time in less than a week. The dollar/yen dropped below the key 95-handle to a new 10-week low.
(Read More: Is It Game Over for Japanese Equities?)
Elsewhere in Asia, markets experienced a bout of heavy selling with the Shanghai Composite down nearly 3 percent, Seoul shares falling to a new eight-week low and Australia's S&P ASX 200 hitting a fresh five-and-a-half-month low. Emerging markets also extended losses as capital flows continue to exit local equities. Thailand's SET index and Philippine's benchmark index slumped over 5 percent each, extending broad losses.
"We are seeing the first signs of a lack of confidence in the ability of central banks to control the interest rates, and to stimulate inflation and real GDP growth rates," said Viktor Shvets, head of strategy research, Asia, at Macquarie.
Apple edged higher amid buzz that the tech giant may be launching iPhones with bigger screens, cheaper models, and in a range of colors over the next year, according to Reuters, citing sources familiar with the matter. Apple declined to comment.
DuPont declined after the chemical company it expects to see full-year earnings at the lower end of its previously issued guidance, citing unseasonably cool weather across the U.S. and Europe.
Meanwhile, a U.K. parliamentary report out on Thursday panned Google for aggressively avoiding paying corporate tax in Britain, and said its international reputation will be damaged until it pays what it owes.
Later this afternoon, the government is scheduled to auction $13 billion in 30-year bonds, following Wednesday's lackluster sale of 10-year notes.
—By CNBC's JeeYeon Park. Follow JeeYeon on Twitter: @JeeYeonParkCNBC