Slaughter on Wall Street

Additionally, December's headline number was revised downward to 2.8% growth from 2.9%.

"Most believe the Federal Reserve's hands are tied, meaning that they would like to raise rates but won't risk hurting the economy to do so," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "If a rate cut is off the table, then economic weakness is negative news."

However, there was positive news elsewhere on the economic docket. First, the National Association of Realtors said existing-home sales rose 3% to 6.46 million annualized units in January, above estimates of 6.24 million. It was the largest increase in sales since January 2005.

Still, the Philadelphia Stock Exchange Housing Sector index fell 2.7%.

Also, the Conference Board said that its consumer confidence index rose to a reading of 112.5 in February, above both the January number and economists' expectations.

Meanwhile, equities were pummeled overseas. A benchmark index in mainland China sank more than 9%, while Tokyo's Nikkei dipped 0.5% to 18,120 and Hong Kong's Hang Seng slid 1.8% to 20,148.

In Europe, London's FTSE 100 dropped 2.3% to 6287, and Frankfurt's Xetra DAX surrendered 3% at 6819.

Crude oil fell as low as $60.06 a barrel before reversing. The April contract added 7 cents to close at $61.46 a barrel on the New York Mercantile Exchange, while gold eased $2.60 to $687.20 an ounce.