Major U.S. stock indices closed lower across the board as selling pressure, initially concentrated in companies perceived as vulnerable to artificial intelligence disruption, spread to multiple sectors.

The S&P 500 fell 1.6%, marking its third consecutive day of declines. The majority of large-cap stocks, including Apple, traded lower.

The technology-heavy Nasdaq 100 Index dropped 2%, recording its fifth session in the past ten with a daily loss of at least 1%.

Technology shares led the downturn, with significant declines in Cisco, AppLovin Corporation, and Tyler Technologies. Cisco plunged 12% as investors grew concerned that pressures on hardware and memory chip pricing could impact the company's outlook.

The consumer staples and utilities sectors were the top performers, indicating a continued investor shift into defensive areas of the market.

A prevailing theme across nearly the entire market, not just technology, is a 'sell first, ask questions later' approach to any news related to artificial intelligence, according to analysis from the trading desk at Jefferies LLC.

The Dow Jones Industrial Average, which recently hit a record high led by transportation stocks, fell 1.3% as those same stocks reversed sharply lower.

Industrial and transportation stocks became the latest sectors to face selling pressure, following earlier weakness in wealth management and software companies also seen as potential targets for AI-driven disruption.

Small-cap stocks, which have been market leaders this year, also retreated. The Russell 2000 Index declined 2%.

Major indices had opened higher after data showed a slight decrease in U.S. initial jobless claims, but those gains were quickly erased.

Traders are focused on Friday's inflation report for further clues regarding the Federal Reserve's interest rate path.

At the close, the S&P 500 was down 1.6% at 6,832.76, the Dow Jones Industrial Average was down 1.3% at 49,451.98, the Nasdaq Composite was down 2% at 22,597.15, the Nasdaq 100 was down 2% at 24,687.61, and the Russell 2000 was down 2% at 2,615.83.