NEW YORK (MarketWatch) -- U.S. stocks fell sharply Thursday, with the Dow industrials suffering a 344-point decline, as rising jobless claims data, mixed retail sales and weaker oil prices fueled concerns about slowing growth both at home and abroad.

And in the backdrop, fear about ailing financial companies remained firmly in place. Rumors that hedge fund Atticus Capital was liquidating positions and closing down also made the rounds, although the fund denied the rumors. See related story on WSJ.com.

"There's basically not much good news at the moment," said Ken Tower, vice president at Quantitative Analysis Service. "The main concern is about growth and that there is a global slowdown now in the offing."

The Dow Jones Industrial Average DJIA, -0.47% fell 344 points, or 3%, to end at 11,216, its worst percentage drop since June 26.

Shares of Caterpillar Inc. CAT, -0.18% were among the biggest decliners among blue chips, off 5.6%. The stock fell in tandem with fellow farm and machinery equipment maker Terex TEX, +1.68% , which issued a profit warning, citing slower business.

"The idea from 10 months ago that there was some sort of decoupling [between the U.S. and other economies] has fallen flat on its face," Tower said.

Overseas, both the European Central Bank and the Bank of England kept interest rates unchanged, as they signaled rising concerns about weakening economic growth.

Meanwhile, crude-oil futures continued to slide, a sign that some analysts say also reflects concerns about slowing global growth. See Futures Movers.

Among other Dow components, even shares of Wal-Mart Inc. WMT, -0.08% lost earlier gains, scored after the giant discounter's monthly sales topped projections.

But while "news on the retail front was mixed-to-firmer, led by a rise in Wal-Mart same-store sales for August [...] others were not quite so fortunate," said Action Economic analysts. Read full story on retailers.

The S&P 500 index SPX, -0.48% fell 38 points, or 3%, to end at 1,236, while the Nasdaq Composite COMP, -0.29% fell 74 points, or 3.2%, to end at 2,259.

No more love for multinationals

By sector, industrials and materials were leading the way lower, both falling more than 4%.

"There's a big shift between what's working in the market and what's not," said Owen Fitzpatrick, head of U.S. equities at Deutsche Bank.

"That last group that had held up so well -- multinational industrials and materials are -- now leading the way down," he said. "But in an environment where economies are slowing, you need to see every sector roll."

Fresh data fueled concerns about the state of the economy ahead of Friday's key August jobs report.

The Labor Department said jobless claims rose last week to a seasonally adjusted 444,000, up 15,000 from the previous week. It marked a shift after three weeks of declines, surprising analysts who expected a slight drop. See Economic Report.

Separately, the ADP employment index had private-sector employment dropping 33,000 in August, suggesting nonfarm payrolls fell about 13,000 in August, according to media reports. Read more.

Financials stocks also weakened, led by shares of Lehman Brothers LEH, and Merrill Lynch MER, +27.69% , which were hurt by reports they may be having some trouble clearing up their balance sheets.

Separately, Lehman analysts cut their earnings estimate on American Express AXP, -1.08% , with shares of the blue chip slipping 5.6%.

Stocks briefly came off lows after news that activity in the nonmanufacturing sectors of the U.S. economy expanded slightly in August, according to the Institute for Supply Management. The ISM nonmanufacturing index rose to 50.6% in August from 49.5% in July.

In a separate and more upbeat report, the government said the productivity of U.S. nonfarm businesses was revised higher in the second quarter than previously estimated, climbing at a 4.3% annual rate in the quarter, up from 2.2% in the earlier estimate. See details.

"The market is really just paying close attention to the fundamentals of the economy, not speeches by Fed officials. Traders pretty much know the Fed is on hold right now and would rather focus on the economic numbers when making purchase and sale decisions," said Kevin Giddis, managing director at Morgan Keegan & Co.

On Wednesday, stock indexes closed mixed, with the Dow industrials striking its first gain in three sessions, rising 15.96 points to close at 11,532.88, leaving it down 13.06% year-to-date.