The fall has erased all remaining gains made by the market in 2018.
The outlooks from some of the companies that reported third-quarter results this week, including Caterpillar, 3M and United Parcel Service, only stoked those worries.
Some encouraging economic news helped stabilize markets. That's higher than what many economists had been projecting, but lower than the 4.2 per cent rate of growth in the second quarter.
Big earnings gains for several USA companies helped encourage investors to start hitting the "buy" button again.
The Dow dropped 296.24 points, or 1.2 per cent, to 24,688.31.
The Dow Jones Industrial Average rose 401 points, or 1.6 percent, to 24,984.
The technology-heavy Nasdaq composite had its worst day since in seven years and finished 12.3 percent below its August peak.
The S&P 500 lost 3.1 per cent to 2,656.10 and has lost about 9.4 per cent from its September 20 peak.
The Nasdaq registered its biggest daily percentage gain since March 26.
Concerns about rising rates and the trade war have spooked the markets this month. They will get more insight into how the United States is doing early on Friday when the government reports on economic growth during the third quarter.
The French CAC 40 jumped 1.6 percent and Germany's DAX added 1 percent. "I think tech is just caught up in it today".
Lewis Hamilton, Mercedes braced for opening lap 'carnage' in Mexico
The German, 70 points behind Hamilton with only 75 to play for, finished fourth, 1.23 seconds slower than the speedy Red Bulls. In recent weeks, Ricciardo has been beset with a raft of auto issues, with his early retirement from last weekend's U.S.
Twitter soared 15.5 percent to $31.80 and electric auto maker Tesla jumped 9.1 percent to $314.86 after their quarterly reports, while video game maker Take-Two vaulted 8.8 percent to $120.70 after strong reviews for its latest game, "Red Dead Redemption 2". The last S&P 500 correction happened in February.
HOUSING SKID: The Commerce Department said sales of new USA homes plunged 5.5 percent in September, the fourth monthly drop.
Apple fell 1.6 percent after hours, while Twitter dipped 2.5 percent. She expects that to change when the dust settles.
Results from S&P 500 companies have pushed up third-quarter profit growth estimates to 23.6 percent from 21.8 percent in the last 10 days. But huge companies like Microsoft, Alphabet and Amazon.
If you're an investor who was lulled to sleep by the stock market's calm, steady gains this summer, you're wide awake by now.
The sector has lost about 10 percent in October and, if losses hold, it would be the worst month for the high-growth sector in almost 10 years.
The market rout continued on Wall Street on Friday. In Asia, Japan's benchmark Nikkei 225 lost 0.4 per cent, while South Korea's Kospi dropped 1.8 per cent. Australia's S&P/ASX 200 was flat. Britain's FTSE 100 inched up 0.1 percent.
Microsoft jumped 5.4 percent, Visa rose 2.9 percent and Comcast climbed 3.3 percent. The Russell 2000 index of smaller-company stocks is down 4.4 per cent for the year. Also in Hong Kong, airline Cathay Pacific's shares dropped as much as 6.5 per cent but ended 3.8 per cent lower after it said it had discovered a data breach affecting 9.4 million passengers.
The S&P 500 posted 14 new 52-week highs and 91 new lows; the Nasdaq Composite recorded 15 new highs and 445 new lows. Japanese telecom and energy giant Softbank lost 4.4 percent.
Investors may also be signaling their concern that interest rate hikes by the Federal Reserve will dampen US economic growth, according to Capital Economics.
On Wednesday, data showed sales of new USA single-family homes fell to a near two-year low in September, the latest sign that rising mortgage rates and higher prices were hurting demand for housing.