Stocks on Wall Street fell steeply on Thursday, dragged down by lower commodity prices and global economic data that suggested a slowdown in key sectors.


Crude oil prices were down by more than 3 percent in late trading, and energy and materials stocks led the losses in the broader equities market.


By the end of trading, the Standard & Poor’s 500 index was down 2.2 percent, while the Dow Jones industrial average lost 2 percent – or 250 points – and the Nasdaq composite about 2.4 percent.


Financial stocks were down more than 2 percent as Moody's Investors Service was expected to announce its decision on the credit ratings downgrades on 15 major banks.


In addition, economic data throughout the day presented a bleak picture globally. Manufacturing activity in China, the world's second-largest economy, shrank, while euro zone business activity retreated for a fifth month, the latest data showed. Other reports showed a decline in existing home sales in May and a rise in first-time jobless claims in the United States that was higher than forecast.


"The home sales market is still on the mend," said Patrick Newport, a United States economist for IHS Global Insight, in a research commentary. "But the path to recovery will be a slow and bumpy one. The key obstacle to a strong recovery right now is tight credit."


The decline in the markets took place a day after the Federal Reserve announced it would extend its asset purchase program by buying about $267 billion in longer-term Treasury securities. Analysts have questioned just how far the program, which is intended to drive down long-term interest rates, would go in boosting economic growth.


Bond yields fell on the 10-year Treasury as the economic outlook dimmed, to about 1.6 percent.


In Europe, an audit of Spanish banks that showed they require more capital added to the bleak picture for the euro zone. Most of the European indexes had traded higher earlier in the day before finishing lower.