U.S. stock index futures accelerated losses after weekly jobless claims rose unexpectedly, indicating the economy's problems are far from over.
The government said weekly claims rose 2,000 to 484,000for the week ended Aug. 7, making the highest point since Feb. 20. Economists had expected claims would fall 14,000.
The government also report import price rose 0.2 percent in July, slightly less than expected, after falling 1.3 percent in June, and a revised 0.8 percent in May, due to higher oil prices.
Futures had been lower prior to the data release and fell even further, compounding losses after stocks suffered their worst slide since July 16 during the previous session. The major averages fell between 2.5 and 3 percent.
European stocks were mostly lower with bank stocks being sold off. Asian markets closed mostly in the red in the wake of the Wall Street selloff.
Cisco Systems looked to be one of the biggest drags on the market, after its quarterly earnings fell short of estimates Wednesday, with the stock tumbling about 5 percent after hours. Shares fell 7.5 percent in premarket trading.
The dollar continued to gain ground against a basket of foreign currencies, rising 2.3 percent since the Federal Reserve said Tuesday that economic conditions remained weak and the central bank was committed to supportive measures.
In the auto industry, General Motors reported a quarterly profit of $1.3 billion as the company prepares to start trading publicly again with its initial public offering. The company has secured a $5 billion credit facility relative to the IPO, the Wall Street Journal reported.
Advanced Auto Parts shares could be called higher after the company reported a 26 percent quarterly profit increase and raised its full-year outlook.
Also on the data front, the Energy Information Administration will issue its weekly reading of natural gas inventories at 10:30 am.
Meanwhile, the Treasury will sell $14 billion in 30-year bonds, following its sales of 3-year and 10-year notes earlier this week, with the results available shortly after 1 pm.
Retailer Kohl's reported better-than-expected earnings, but its outlook for the second half of the year fell short of expectations.
Sara Lee reported a profit for the fourth quarter after a loss, as it earned $187 million, or 28 cents per share, for the quarter ending July 3. Last year the company lost $14 million, or 2 cents per share. Sara Lee's sales rose 4.2 percent thanks to the food maker snagging higher prices for more items.
Retailer Nordstrom, chipmaker Nvidia, and Autodesk are among the companies out with reports after the closing bell.
In other news, General Motors is reportedly planning to file for its initial public offering Friday, and has also finalized a $5 billion credit facility.
- Peter Schacknow, Senior Producer, CNBC Breaking News Desk, contributed to this report.