The Dow Jones industrial average (^DJI) tumbled 176 points, the Standard & Poor's 500 index (^GPSC) slid 16, and the Nasdaq composite (^IXIC) lost 24 points. It was a broad-based decline, with losers outnumbering gainers by a wide margin.
The financial components of the Dow led the way, with American Express (AXP), Goldman Sachs (GS), JPMorgan (JPM) and Visa (V) all losing about 2 percent.
Chinese stocks that also trade in the U.S. were hit hard -- Baidu (BIDU) and Sina (SINA), for example, fell about 6 percent, and Qihoo 360 Technology (QIHU) lost 3 percent.
The troubling report from China was the biggest problem, but corporate earnings also provided a drag on prices.
There were a few stocks that bucked the downtrend. McDonald's (MCD) edged 0.5 percent higher as its net edged above expectations. AT&T (T) , which said it expects a $7.6 billion accounting gain, added almost 1.5 percent.
Union Pacific (UNP) gained more than 3 percent, and rival railroad Norfolk Southern (NSC) rose 0.8 percent on a JPMorgan upgrade.
And the big winner was Netflix (NFLX). Its net soared and the number of subscribers jumped well above expectations. The stock rallied more than 16 percent on the day, and it has nearly quadrupled in value over the past year.
Elsewhere, Herbalife (HLF) tumbled more than 10 percent after Massachusetts Sen. Ed Markey called for a Congressional investigation of its business practices. The company has been targeted over the past year by some short-sellers who claim the nutrition company is operated like a pyramid scheme.
And American Eagle (AEO) fell almost 8 percent after its CEO unexpectedly resigned. The retailer has struggled with disappointing sales.
What to Watch Friday:
Theses companies are due to report quarterly financial results before U.S. markets open: