U.S. stocks ended lower on Thursday, weighed down by disappointing data on service sector, as investors were cautiously awaiting Friday's key payrolls report.

When the market closed, the Dow Jones industrial average dropped 61.98 points, or 0.47 percent, at 13,206.59. The Standard & Poor's 500 was down 10.74 points, or 0.77 percent, to 1,391.57. The Nasdaq Composite Index lost 35.55 points, or 1.16 percent, at 3,024.30.

Stocks began to retreat after a report from the Institute for Supply Management showed the pace of growth in the U.S. services sector slowed more than expected in April and new orders dropped.

The ISM's non-manufacturing purchasing managers' index came in at 53.5 last month, down from 56.0 in March.

Cautiousness clearly prevailed on Wall Street before the government is set to announce its highly anticipated payrolls report on Friday.

Right now, economists were expecting the economy to add as many as 168,000 jobs in April and the unemployment rate to stay unchanged at 8.2 percent.

Earlier on Thursday, the Labor Department said the number of people applying for unemployment benefits dropped 27,000 to a seasonally adjusted 365,000 last week, far more than economists had expected.

The sharp decline in initial claims was a hopeful sign before government's monthly payroll data due on Friday, but investors were cautious as Wednesday's ADP data indicated that private sector added only 119,000 jobs in April, about half of the March figure, which added to fears that hiring has slowed considerably in recent months.

Among stocks in focus, Green Mountain saw its market value evaporate nearly 50 percent after the coffee roaster said it will sell less products this year, reigniting serious concerns over its growth prospects going forward.

Meanwhile, Facebook has set its IPO price ranges between high 20s to mid 30s on Thursday, which put the valuation of the social network company at 85 billion to 95 billion dollars, lower than the previous expectation of around 100 billion dollars.

In other markets, the dollar gained for the fourth straight day against the euro after the European Central Bank gave an upbeat assessment of the region's economy but left the door open for policy easing.

Crude prices tumbled on Thursday amid weak data and strong dollar. Light, sweet crude for June delivery fell 2.68 dollars, or 2.55 percent to settle at 102.54 dollars a barrel on the New York Mercantile Exchange.