In a week that was short on critical economic reports, China's purchasing managers index came in just under 50, indicating contraction.
"There's a lack of buyers supporting the market and incremental sellers who are de-risking on the back of the macro developments," Doug Crofton, head of U.S. cash equity trading at Bank of America Merrill Lynch told the Wall Street Journal.
After dropping 175 points Thursday, the Dow Jones industrial average gave up 318.24 points Friday, down 1.96 percent, to 15,879.11 -- the largest one-day drop in seven months.
The Standard & Poor's 500 lost 38.17 points, 2.09 percent, to reach 1,790.29. The technology-dominated Nasdaq composite index dropped 90.70 points, 2.15 percent, to 4,128.17.
On the New York Stock Exchange, 431 stocks advanced and 2,728 declined on a volume of 4.6 billion shares traded.
In Japan, the Nikkei 225 index lost 304.33 points, 1.94 percent, to 15,391.56.
In Europe, London's FTSE 100 lost 109.54 points, 1.62 percent, to 6,663.74.
The 10-year U.S. treasury was yielding 2.72 percent on a gain of 17/32.
The euro traded higher at $1.3677 and the dollar was lower against the yen at 102.30 yen.
Gold added $6.80 to close at $1,269.30 an ounce on the Comex division of the New York Mercantile Exchange. Silver shed 11 cents to settle at $19.90 an ounce.
Crude oil dropped 42 cents to close at $96.90 per barrel on the NYMEX.
On the Chicago Board of Trade, March corn was up 0.5 cents to $4.295 per bushel. Soybeans were up 7.5 at $12.845 and winter wheat dropped 4 cent to $5.66.