Gloomy reports about the health of the world economy rocked Wall Street on Thursday, stirring more worry about the stalled recovery and sending the stock market to its second-worst decline this year.
The Dow dropped after the Philadelphia branch of the Federal Reserve reported a manufacturing slowdown resulting from a steep drop in companies' orders.
Meanwhile, the Labor Department reported that the four-week average of applications for unemployment benefits jumped to the highest level since September.
The National Association of Realtors also reported that sales of previously owned homes dropped 1.5 percent in May.
The report on slowing manufacturing in China was troubling since that country has helped drive global economic growth over the past four years. China is a major importer of copper and other basic materials.
A manufacturing survey for countries that use the European currency also showed a contraction. That report, together with the China slowdown, helped sink commodity prices.