New York CNN  —  Stocks tumbled Thursday after fresh data stoked fears that the US economy is weakening as interest rates stay at a 23-year high. The Dow slid by 496 points, or 1.2%, after plunging more than 700 points earlier in the session. The S&P 500 lost 1.4% and the Nasdaq Composite fell 2.3%. US Treasury yields fell. The 10-year yield dipped below 4%. “With a package of data released today suggesting the economy is cooling at a faster — and perhaps too fast — pace, the drop in the ten-year Treasury yield to below 4% reflects a looming economic growth scare,” wrote Quincy Krosby, chief global strategist at LPL Financial, in a Thursday note. New economic data revealed that first-time applications for jobless benefits rose last week to an estimated 249,000 filings. That’s the highest tally since last August, according to the Labor Department. Meanwhile, continuing claims, filed by people who have received unemployment benefits for at least a week, jumped to 1.877 million. That’s the highest level since November 2021. Friday’s jobs report should provide some key insight into whether the labor market has enough gas in the tank to stay on cruise control. Michael M. Santiago/Getty Images/File Related article There are cracks forming in the US jobs market Investors cheered Wednesday after the Federal Reserve signaled at its policy meeting that a long-awaited rate cut is on the table for September. The Fed also noted that inflation is now only “somewhat” elevated, acknowledging the progress it has made in tamping down wayward price increases since the central bank began hiking rates in 2022. But the Fed also said that it is shifting its focus to the other part of its dual mandate: maximizing employment. That means Wall Street is looking for signs that the job market is staying strong and supports a soft landing for the economy, a scenario in which inflation cools without triggering a recession. While the labor market has stayed remarkably resilient in face of sky-high rates, there are cracks forming. Employers aren’t hiring at the same pace they have in recent years. Wage growth is running at a cooler pace and the unemployment rate is now at its highest point in more than two years, at 4.1%. Federal Reserve Chair Jerome Powell speaks at a news conference on July 31 in Washington, DC. Andrew Harnik/Getty Images Related article Key takeaways from the latest Fed meeting Investors will get their next look at the state of the economy on Friday morning from the July jobs report. Economists polled by FactSet project a net gain of 175,000 jobs — a touch below the average for the past three months — and for the unemployment rate to hold steady. Federal Reserve Jerome Powell said Wednesday that any significant weakening in the job market would be concerning. “If we see something that looks like a more significant downturn, that would be something that we would have the intention of responding to,” he said at the Fed’s post-meeting press conference. Given Powell all but guaranteed a [quarter-point] rate cut in September, this data doesn’t change our opinion that that is still the most likely outcome,” wrote Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, in a Thursday note. “However, the one thing that would cause the Fed to cut more dramatically … is if we had a material deterioration in the job market.” It’s been a turbulent few weeks for markets, as some earnings reports have underwhelmed and fear about increased regulation of tech and lackluster AI performance have soured investors’ moods. Companies have reported US consumers have pulled back from restaurants and retailers, and this week some preliminary jobs data looked weak. Still, America’s economy remains undeniably strong, and Wall Street seems unfazed by Vice President Kamala Harris’ surprise frontrunner status for the Democratic presidential nomination. As stocks settle after the trading day, levels might change slightly. CNN’s Bryan Mena, Alicia Wallace and David Goldman contributed to this report.