Major U.S. Indexes

The Nasdaq composite closed 1 percent lower at 6,089.46. The S&P 500 finished Thursday down 0.4 percent at 2,409.75. Earlier, the major indexes pared losses in midday trade. Tech trimmed losses from an earlier decline of more than 1 percent to close 0.8 percent lower. "Tech has recovered. You've seen German 10-year bund yields and U.S. Treasury yields kind of steady here. They're not going anywhere," said Jeremy Klein, chief market strategist at FBN Securities. There's a "comfort of yields steadying, allowing tech to recover." Global sovereign bond yields held higher. The 10-year German Bund yield broke above 0.50 percent for the first time since January 2016 and the U.S. 10-year Treasury yield climbed to 2.38 percent. Julian Emanuel, UBS equity and derivatives strategist, said in a note Wednesday that higher yields could present a problem for tech stocks near-term. Higher yields "will require superior earnings reports to halt the slide – the 'Summer Squall' for Tech and the 'Summer Stall' for the broad market could continue through July," he said. Shares of Facebook, Tesla, Apple, Netflix and Google parent Alphabet all traded lower, pushing the Technology Select Sector SPDR exchange-traded fund (XLK) down by 0.9 percent. Tesla shares fell 5.5 percent Thursday, sending shares down 20 percent from a recent high, or into bear market territory. In the last two days a slew of analysts, including ones from Goldman Sachs and Bernstein, said in notes that Tesla's second-quarter delivery results disappointed them. Tech — this year's best-performing sector coming into Thursday's session — has been sputtering lately, falling 4 percent over the past month. The sector was also on track for its fourth losing session in five and has been plagued by valuation concerns. That said, the sector's pullback should be short-lived, said Kim Forrest, senior equity analyst at Fort Pitt Capital. "Valuations are rich, but if think more money is going into these companies, then you're going to buy them anyway," she said.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 7, 2016. Brendan McDermid | Reuters

Bond prices have been falling as major central banks have adopted more hawkish rhetoric, especially from the European Central Bank. Last week, ECB President Mario Draghi said the European economy was "strengthening and broadening," adding "the threat of deflation is gone and reflationary forces are at play." "If Draghi hadn't spoken, yields globally would probably be unchanged," said Eric Souza, senior portfolio manager at Silicon Valley Bank. "The market is basically looking down the road and realizing that this low-rate environment we're used to may not be ending, but [central banks] are definitely taking their foot off the pedal." Minutes from the ECB's June meeting released Thursday also showed officials discussed shifting their bias from easing to neutral, helping yields in the region rise and drag their U.S. counterparts higher. "There's a good analogy between what's happening right now in the German bond market and what happened in the U.S. bond market back in 2013," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott, referring to the so-called Taper Tantrum. Investors in the U.S. also focused on a series of economic data releases. First, a report from ADP and Moody's Analytics showed the U.S. economy added 158,000 jobs last month, less than the expected 185,000. The report usually serves as a warm-up act for the Bureau of Labor Statistics' monthly employment report, which is set for release Friday. "When we get to the level of employment that we have, ... you'd expect the pace of jobs creation to slow down," said Bill Northey, chief investment officer at the Private Client Group at U.S. Bank. "What we're looking for is how does that relate to inflation." Weekly jobless claims, meanwhile, came in at 248,000, slightly higher than the expected 243,000. Other data released included the IHS Markit services PMI for June, which showed the strongest expansion in business activity since January, and the ISM nonmanufacturing index, which rose to 57.4 in June from 56.9 in May. Gold futures for August delivery rose $1.60 to $1,223.30 an ounce. The U.S. dollar index traded about half a percent lower, with the euro near $1.14 and the yen around 113.33 against the dollar. The CBOE Volatility Index (VIX), considered the best gauge of fear in the market, traded near 12.60, near its highest since June 29. About five stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 877.77 million and a composite volume of 3.353 billion at the close. — CNBC's Tae Kim and Evelyn Cheng contributed to this report.

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