The selloff on Wall Street has picked up speed and European markets closed sharply lower after another spike in US jobless claims and concerns over rising coronavirus cases in some states that have reopened their economies.

The Dow Jones, Nasdaq and the S&P 500 were all lower with the Dow down around 5% after midday.

The Nasdaq had closed at records the last three days amid a major rally by US stocks following their March plunge.

Some analysts believe traders have overestimated the likely economic rebound following coronavirus shutdowns.

Despite moves to reopen businesses nationwide, another 1.54 million US workers filed for unemployment benefits last week, the Labor Department reported, bringing the total initial claims since the shutdowns began in mid-March to 44.2 million.

The figure was lower than last week's jobless claims, but a gloomy reminder of the headwinds facing the US economy.

On Wednesday, Federal Reserve Chief Jerome Powell highlighted the uncertainty of the outlook after the central bank signaled it expects to keep interest rates lower for the next few years.

Analysts also pointed to rising coronavirus cases in some states that have reopened, a trend that could depress economic activity even if it doesn't result in more lockdowns.

Among individual companies, Grubhub rose 5.7% after agreeing to be acquired by Anglo-Dutch meal delivery firm Just Eat Takeaway.com for $7.3 billion, which would form the world's largest online food delivery company outside of China.