US stocks was hit hard Thursday, as a Malaysian passenger jet crash in Ukraine ignited market risk aversion.

The Dow Jones Industrial Average, having set a new record intraday high of 17,151.56 points shortly after the opening bell, slumped below the 17,000 mark by the close of the market. The blue chip index plunged 161.39 points, or 0.94 percent, to finish at 16, 976.81.

The S&P 500 lost 23.45 points, or 1.18 percent, to 1,958.12. The tech-heavy Nasdaq Composite Index sank 62.52 points, or 1.41 percent, to 4,363.45.

A Malaysian passenger airliner carrying 295 people on board crashed in Ukraine near the Russian border Thursday. At the news, investors tried to flee from risky assets to safe haven such as gold, putting a damper on stocks.

In addition, having seen major indices refresh record highs repeatedly recently, investors were looking for an excuse to take money off the table.

The CBOE Volatility Index, often referred to as Wall Street's fear gauge, spiked 32.18 percent to end at 14.54.

Despite Thursday's retreat, some traders still believed that macro uncertainties may not alter a strong performance in the US equity market, though a technical correction is also viewed as healthy for the market.

Recent economic data and corporate earnings generally pointed to a continued recovery for the world's largest economy.

On the economic front, US privately-owned housing starts in June fell sharply by 9.3 percent to a seasonally adjusted annual rate of 893,000, said the US Commerce Department Thursday. Meanwhile, building permits, a gauge of future construction, dropped 4.2 percent last month.

However, the number of Americans who initially applied for jobless benefits last week declined 3,000 to a seasonally adjusted 302,000, said the US Labor Department. The four-week moving average, a less volatile measure of new claims, also dipped 3,000 to 309,000, representing the lowest level in just over seven years.

In corporate earnings, Morgan Stanley reported net revenues of $8.6 billion for the second quarter of 2014, up 1 percent from the year-ago period. Its second-quarter income from continuing operations applicable to the company surged 91 percent to $1.9 billion, or 94 cents per diluted share. Its shares reversed earlier gains to turn lower, down 0.62 percent to $32.30 apiece, though still beating market expectations.

Shortly after the closing bell, tech giant IBM delivered better- than-expected quarterly profits while Google missed market consensus in its quarterly earnings.

In other markets, the dollar retreated against most major currencies Thursday and dropped versus the Japanese yen on larger demand for safe assets after the Malaysian plane crash.

In late New York trading, the euro rose to $1.3527 from $1.3523  of the previous session. The US dollar bought 101.31 Japanese yen, low than 101.72 yen of the previous session.

Gold futures on the COMEX division of the New York Mercantile Exchange surged. The most active gold contract for August delivery rallied $17.1, or 1.32 percent, to settle at $1,316.9 per ounce.

Crude prices gained following the Malaysian passenger jet crash. Escalating tensions in Ukraine ignited concerns over global energy supplies.

Light, sweet crude for August delivery moved up $1.99 to settle at $103.19 a barrel on the New York Mercantile Exchange, while Brent crude for September delivery gained 72 cents to close at 107.89 dollars a barrel.