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Wall Street poised for more selling, tech in focus

U.S. stock index futures indicated a sharply lower open on Thursday, with Dow futures briefly tumbling more than 130 points after stocks plunged to close over 1 percent lower Wednesday.

The move lower weighed on European stocks in early trade Thursday, which posted heavy losses. All major bourses in Europe were trading over 1 percent lower.

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The Dow Jones Industrial Average extended losses Wednesday to close down about 290 points, as all the major indices declined, giving back gains from the rally following last week's Fed announcement.

The U.S. dollar continued to edge lower, with the euro at $1.10.

Traders work the floor of the New York Stock Exchange.
Adam Jeffery | CNBC
Traders work the floor of the New York Stock Exchange.

Traders will be watching small caps and the biotech sector Thursday to see whether they continue to lead the selloff in the broader market.

Other weighing factors included weak durable goods data and tensions in the Middle East, which caused oil prices to surge on Thursday after Saudi Arabia and its Gulf Arab allies began a military operation in Yemen.

Brent crude oil futures traded near $59 a barrel, while U.S. crude climbed about $2 to trade over $51 a barrel.

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U.S. jobless claims fell to a five-week low, pointing to a healthy and expanding labor market.

Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 282,000 for the week ended March 21, the Labor Department said on Thursday. That was the lowest level since mid-February.

"Bottom line, economic growth has clearly slowed but the labor market has been very stable as it should as we'll likely get a second quarter growth rebound. The pace of firing's remain modest and labor market stats are lagging indicator anyway," Peter Boockvar, chief market analyst at The Lindsey Group said in a note.

Little other data is expected Thursday, with the Kansas City Fed's manufacturing index for March due for release. It is expected to hold steady at a reading of 1—the lowest since 2013.

Services and composite flash PMIs for March will also be published.

Federal Reserve policymaker Dennis Lockhart said on Thursday that economic growth in the first quarter looks very soft and that a rate hike should come in the middle of the year or later.

Another Fed official James Bullard said earlier that now may be a good time to start normalizing U.S. monetary policy, in a speech to an audience in Frankfurt.

The St. Louis Fed President said doing that would direct policy "appropriately for an improving economy over the next two years."

Gamestop and Voxeljet AG report after the bell.

Lululemon beat estimates by five cents with quarterly profit of 78 cents per share, with revenue essentially in line and same-store sales increasing by five percent. However, Lululemon's forecast for the current quarter is short of Street estimates.

Winnebago missed estimates by 8 cents with quarterly profit of 30 cents per share, with revenue also well below forecasts. The recreational vehicle maker said it was hurt by labor-related constraints and higher operating expenses, although it also said it was seeing its profit margins improve and expects positive cash flow during the second half of the year.

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Apple and its Beats music service are working on a subscription streaming services that won't have a free tier, according to a story in the New York Times. Separately, Apple is planning an iPhone trade-in program in China, according to Bloomberg.

CNBC's Peter Schacknow contributed to this report.