The dollar had taken off after an influential survey of the US services sector showed activity at its strongest since August 1997, sparking speculation the payrolls report on Friday could also surprise.
The ironic part of it all is that these concerns all stem from what is, at its core level, burgeoning economic growth in the US.
While that's usually good news for stocks, the market stumbled this week as investors sold government bonds at a rapid pace.
This time it wasn't only the rate-sensitive two-year yields that marched higher. Fed Chairman Jerome Powell stoked the rates surge when he said the central bank could eventually boost its benchmark past the neutral level.
In a moderated discussion, Powell expressed confidence in the economy and said rising interest rates are a "long way" from holding back growth.
"This is a report that's consistent with being pretty close to full employment and it's going to reinforce the Fed's path for raising rates", Alan Krueger, professor of economics at Princeton University, said on Bloomberg TV.
Traders work on the floor of the New York Stock Exchange.
Foreign investors remained net sellers for a third day pulling out Rs 2,760.63 crore from stock markets.
The Dow Jones industrial average rose 0.2%, the S&P 500 gained 0.07% and the Nasdaq composite index added 0.32%.
The sell-off in technology and internet companies and retailers continued. The Nasdaq composite shed 46 points, or 0.6 percent, to 7,978.
The Dow Jones Industrial Average rose 20 points, or 0.1 percent, to 26,648. That was both indexes worst weekly loss in more than six months. The Russell 2000 index of small-cap stocks also slipped 10 points to 1,661, in line with the broader market.
The yield on the benchmark 10-year note hit a high of 3.232 percent following data released the previous day that was seen as increasing the odds a payrolls report due on Friday would also be stronger than expected.
"There is no material slowdown in the US economy". It was the largest daily increase since the shock outcome of the USA presidential election in November 2016. At the start of this year they had looked for only 2.1%. Technology and consumer discretionary slid 1.78 percent and 1.60 percent, leading the laggards.
The euro declined less than 0.1 percent to $1.1524. His criticisms of the SEC don't appear to be company news, but they may have anxious investors who hoped his feed would be a little more boring from now on. Tesla did not immediately respond to a request for comment.
Costco Wholesale shares dropped 3.1 percent after the company's quarterly sales barely beat analysts' estimates, while gross margins fell on rising costs and higher investments. Costco said it hasn't found any mistakes in its earnings reports so far. Stocks began the day higher after the employment data added to confidence in the strength of the American economy. Germany's DAX lost 1.1 percent and the CAC 40 in France dropped 1 percent. The live dollar index data show the ICE US Dollar index, a measure of the dollar's strength against a basket of six rival currencies, fell 0.2% to 95.732 but is rising now. PC maker Lenovo Group Ltd. plunged 15 percent in Hong Kong, amid Bloomberg's report that China infiltrated US companies by hacking hardware.
West Texas Intermediate (WTI) crude futures fell 93 cents to $75.48 a barrel, a 1.2 percent loss.
Emerging market stocks lost 2.38 percent. lost 0.80.
Similarly, the yield on the two-year Treasury note was last 2.882%, up from 2.860% Wednesday, when it hit its highest point in more than a decade. Silver added 0.4 percent to $14.65 an ounce.
Emerging currencies including the rupee bore the brunt during the day as investors shifted funds from riskier assets to safe bets like the United States dollar. The euro rose to $1.1525 from $1.1515.