Wall Street stocks suffered steep declines last night, giving back some of the gains from a torrid August as investors cashed in amid worries about a bubble in prices.

The tech-rich Nasdaq Composite Index led the market lower following a sell-off in tech shares, losing 5% to end at 11,458.

The Dow Jones shed 2.8% to finish at 28,293 while the broad based S&P 500 tumbled 3.5% to 3,455.

Major tech companies had been soaring in recent weeks, leading the US markets higher, but were among the biggest losers yesterday, with Apple shedding 8%, Google-parent Alphabet losing 5% and Tesla slumping 9%. 

The market was "overbought and due for a pullback," said Quincy Krosby, chief market strategist at Prudential Financial, who noted that September has historically been a bad month for the stock market. 

Major indices enjoyed their best August in decades this year amid expectations that coronavirus vaccines and therapeutics will permit a strong economic recovery. 

But analysts have cautioned that the market was due for a pullback given elevated unemployment as the US continues to contend with the coronavirus pandemic.

Last night's sell-off came after mixed US economic data that included a report showing slower services sector growth in August, bigger-than-expected drop in new jobless claims, record job cuts this year and an unexpectedly big trade deficit for July.

The reports come ahead of today's much-anticipated government jobs report for August, which economists expect to show a surge in hiring and a dip in the unemployment rate to below 10%. 

The rally has been propelled by expectations for strong earnings growth in 2021 following fiscal and monetary stimulus measures.  

But while that outlook may be promising, US unemployment remains exceptionally high following an historic drop in second-quarter growth in the aftermath of coronavirus closures and some analysts warn the market's surge is divorced from economic fundamentals.