Banking shares tumbled on Thursday following signs of major trouble at two regional banks, adding to the pressure on stocks ahead of key US jobs data.

The market movements are a "flight to safety" amid worries about the financial sector, said Art Hogan, an analyst at B. Riley Financial.

"It feels as though there's some cracks in the regional banks," Hogan added.

The Dow Jones dropped 1.7 percent to 32,254, the S&P 500 slumped 1.9 percent to 3,918, and the Nasdaq slid 2.1 percent to 11,338.

SVB Financial Group, a Silicon Valley-focused financial company, disclosed on Wednesday that it had lost $1.8 billion following securities sales to raise funds, as it contends with declining customer deposits.

The news came on top of an announcement the same day that crypto banking titan Silvergate plans to shut down in the face of cryptocurrency market turmoil.

Shares of SVB plunged more than 60 percent, while the banking sector as a whole was a sea of red. JPMorgan Chase dropped more than five percent.

Investors are also feeling cautious ahead of Friday's government jobs report, which will be scrutinised for its implications for monetary policy.

Stocks have fallen this week following congressional testimony from Fed Chair Jerome Powell warning that the central bank could accelerate interest rate hikes depending on economic data. (AFP)