The dollar pulled back after weaker-than-expected US private jobs data affirmed expectations for a gradual pace for US interest rate hikes by the Federal Reserve.
Wall Street followed European shares lower as investors saw little reason to buy in a holiday week ahead of the second-quarter earnings reporting season.
"It's the lull before earnings. There's not as much enthusiasm for buying," said Chris Zaccarelli, Chief Investment Officer at Cornerstone Financial Partners in Huntersville, NC. "Investors don't think companies will surprise as positively as they did in the first quarter."
The Dow Jones Industrial Average fell 89.98 points, or 0.42 percent, to 21,388.19, the S&P 500 lost 15.04 points, or 0.62 percent, to 2,417.5 and the Nasdaq Composite dropped 52.43 points, or 0.85 percent, to 6,098.42.
Europe's Stoxx 600 index touched its lowest point since April 21 and was last down 0.7 percent
MSCI's gauge of stocks across the globe shed 0.3 percent.
Some investors were also likely uneasy about geopolitical issues, according to Zaccarelli. A summit of G20 nations this week has taken on greater significance following this week's test of a long-range missile by North Korea.
Fund manager Jan Dehn of Ashmore identified a trio of concerns spooking investors, especially in emerging markets, where currencies declined
"One is the Middle East and the Qatar-Saudi situation and even the oil market doesn't know how to handle that one," he said. "The second is North Korea, which is classic geopolitical risk, and finally, and probably most importantly, there has been the recent hawkish tilt from the major central banks and it seems to be coordinated."
Dehn also cited some profit-taking in emerging market assets after a stellar first half to the year.
South Africa's rand was down 0.6 percent and Turkey's lira fell 0.5 percent in their second consecutive day of declines.
The rand extended Wednesday's 1.6 percent drop driven by proposals to nationalize South Africa's central bank and expropriate land without compensation.
The dollar index, which measures the greenback against a basket of major currencies, fell 0.37 percent, with the euro up 0.44 percent to $1.1402.
US Treasury yields rose on the prospect of hawkish global central bank policy and as rising oil prices suggested a potential pickup in inflation.
Benchmark 10-year notes were last down 15/32 in price to yield 2.3856 percent, from 2.334 percent on Wednesday.
The 30-year Treasury bond was off 1-9/32 in price to yield 2.9172 percent, from 2.855 percent. Those yields hit a six-week high of 2.923 percent.
Commodity markets continued to swing. Oil recovered some ground after a surprisingly upbeat picture of US demand halted the previous day's 4 percent slide, although the prospect of oversupply in 2018 prompted more analysts to cut price forecasts.
US crude rose 2.48 percent to $46.25 per barrel and Brent was last at $48.89, up 2.3 percent on the day.
Gold pared losses and was last down 0.2 percent at $1,223.80 an ounce.