Shares on Wall Street closed with a 2% fall after manufacturing data in the US, Europe and China pointed to a weakening world economy.
Oil prices were also hit, with both US light crude and Brent crude oil both down more than 3.5%.
The disappointing economic news followed a downgrade of US economic growth expectations on Wednesday.
The Federal Reserve said it now expects growth to be between 1.9-2.4%, 0.5 percentage points lower than before.
Reports of faltering growth began early on Thursday when a report from HSBC said that China's factory sector shrank for the eighth month in a row to its weakest level since early 2009.
That was followed by a report on purchasing managers' activity which suggested the downturn in the eurozone's private sector was becoming entrenched.
June was the fifth consecutive month in which activity had fallen.
Later in the US, figures suggested a weakening in both the housing and labour markets.
On top of that, the Philadelphia Federal Reserve Bank said its index of local manufacturing activity had dropped sharply to -16.6 from -5.8, the lowest in a year.
The Dow Jones average finished with a fall of 250.82 points to 12,573.57, a loss of 1.96% on the day.
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