The slowdown was attributed to weakness in export growth and the construction sector, while investment and domestic consumption supported growth.
Michael Gayed, chief investment strategist at Pension Partners, thinks the latest headlines support the idea that the
may resort to additional stimulus measures.
"For the bulls, the trifecta of slower growth in China, moderating inflation in the U.S., and moderately strong earnings only means one thing: Further monetary easing remains a very real possibility in the face of deflationary pressure," he said in an email.
"Moderating inflation confirms the Fed's view that it can keep rates low for a while (bullish), slower than estimated growth in China means the People's Bank of China could begin to ease rates and jumpstart lending in response (bullish), and earnings surprising modestly on the upside means that there is a lot of room for expectations to continue to build for further stimulus (bullish). While QE3 remains a question mark, China's monetary stance may now be more important for the bulls than the Fed's."
"[The worse than expected China report] was allayed a bit by the trade numbers for the U.S. that showed exports growing fairly strong, surprisingly -- a narrowing trade deficit, and that can only happen if growth in the rest of the world is actually not as bad as one might think," added Brian Gendreau, market strategist, Cetera Financial Group.
Commodities fell and the 10-year Treasury climbed on Friday.
May oil futures were down 77 cents to $102.87 a barrel, while June gold futures lost $23.80 at $1,656.80 an ounce.
The benchmark 10-year Treasury was up 18/32, diluting the yield to 1.99%, while the U.S. dollar index advanced 0.8%.
Europe finished weak, further damaging sentiment on Wall Street as data showed Spanish banks are relying heavily on funding from the European Central Bank.
was down 4.5%. London's FTSE settled 1% lower and Germany's DAX gave up 2.4%.
In Asia, however, Japan's Nikkei Average settled 1.2% higher and Hong Kong's Hang Seng index closed up 1.8% despite the disappointing China GDP data, with those markets focusing instead on the country's surging bank lending figures and the increasing possibility of monetary policy easing.