The Dow Jones industrial average dropped 184.25 points at its lows before closing about 45 points lower, with Goldman Sachs contributing the most losses. The index briefly broke below the 18,000 mark and hit its lowest level since July.
"It felt, to me, like we got a little over-extended to the downside earlier today," said Daniel Deming, managing director at KKM Financial. "We broke through a key technical level on the S&P at 2,120" on an intraday basis.
The S&P 500 fell 0.3 percent, with financials falling 1.1 percent to lead decliners. Energy stocks, meanwhile pared most of their losses as U.S. crude settled 0.52 percent higher at $50.44 per barrel as a drawdown in gasoline inventories offset a build in oil stockpiles.
"Oil initially sold off after the EIA inventories report and quickly turned around. Once it starter going higher, stocks stopped going down," said Adam Sarhan, CEO at Sarhan Capital.
The Nasdaq composite underperformed, falling approximately 0.5 percent. At session lows, the three major indexes traded more than 1 percent lower at session lows.
China exports tumbled 10 percent last month in dollar terms, while imports fell 1.9 percent. Asian equity markets closed mixed overnight, with mainland China's Shanghai composite ending flat and Honk Kong's Hang Seng index falling 1.61 percent.
"Weak global trade should be a surprise to no one but this certainly highlights it in bold lettering," said Peter Boockvar, chief market analyst at The Lindsey Group, in a note. "China macro has taken a back seat of late but data such as this should highlight again the mediocre state of global economic activity."
European stocks followed Hong Kong lower, with the pan-European Stoxx 600 index dropping approximately 0.87 percent. U.S. stock futures fell sharply, with Dow futures trading more than 100 points lower, while S&P and Nasdaq futures fell 14 and 32 points, respectively.
"The number tells you two simple things: we are fighting for demand and the situation is equally worse, whether we look at international demand or domestic number. If we get another number which confirms that economic recovery is under threat over in China, we could have a serious problem," said Naeem Aslam, chief market analyst at Think Markets.