NEW YORK (TheStreet) -- Stocks braced for their worst week of the year on Friday as investors feared an extended slowdown in China.

The Dow Jones Industrial Average dropped 1.3% or 225 points. The blue-chip index is now down 8.4% from its all-time closing high set in May.

The S&P 500 was down 1.4%, and the Nasdaq slid 1.7%.The small-cap index Russell 2000 fell 1.1% and officially entered correction territory, dropping more than 10% since its peak on June 23.

Worries over China continued after manufacturing activity in the country fell to a six-and-a-half-year low. The flash manufacturing PMI fell to 47.1 in August from 47.8 in July. Worries over slowing growth in the world's second-largest economy has triggered selloffs in global markets. China's Shanghai Composite fell 4.3% on Friday and 11% for the week.

"One of the most asked question about China lately has been how fast the Chinese economy is actually slowing," wrote Wei Yao, economist at SG Global Economics, in a note. "In our view, China's structural growth deceleration is only half-way through and under the weight of debt and excess capacity, weakening investment demand will remain the main culprit."

The pace of growth in the U.S. manufacturing sector slowed to its lowest rate since October 2013 in August. The Markit flash PMI index slowed to 52.9 in August, above the 50-level that indicates growth, but down from 53.8 in July.

U.S. stocks posted their biggest drop of 2015 on Thursday as high-momentum consumer and tech stocks such as Apple (AAPL) - Get Report and Twitter (TWTR) - Get Report tumbled on fears the Federal Reserve would hike rates in September despite signs of slowing global growth.

The S&P 500 turned negative for the year after falling 5.4% from its record close set in May. More than half of the S&P 500 have now entered correction territory, having fallen more than 10% from their 52-week highs, according to Forbes calculations.

Netflix (NFLX) - Get Report entered into correction territory on Thursday after falling 11% since its August 6 record close of $126.45 a share. The stock tumbled nearly 8% over the session, caught up in a broad sell-off in the tech sector. Shares fell 5.9% on Friday.

Likewise, Apple suffered a massive decline, falling 2.1% to close at its lowest point since January 27. Shares are now down 15% from its February 23 record close. Shares were down 3.5% on Friday.

Greece added to market uncertainty after Greek prime minister Alexis Tsipras submitted his resignation after losing parliamentary majority. Tsipras had squared off with members of his Syriza party who objected to the bailout agreement with eurozone creditors. Early elections will take place on September 20.

The European Central Bank confirmed it had received a 3.2 billion euro repayment from Greece on Thursday afternoon. The repayment is the last for the next 11 months. Greece recently secured a fresh 86 billion euros ($96 billion) in bailout funds.

Hewlett-Packard (HPQ) - Get Report added more than 4% despite reporting its fifteenth straight quarter of declining sales. Net income of 88 cents a share beat estimates by 3 cents, though revenue of $25.35 billion stumbled 8% and missed expectations. The company is set to split into two companies on November 1 with one company focused on its PC and printer business and the other on enterprise servers and software.

In earnings news, Deere (DE) - Get Report fell 6.9% after reporting third-quarter profit down 40% from a year earlier. The company also cut fourth-quarter guidance, expecting equipment sales down 24% on weak demand in the agricultural sector and a stronger dollar.

Foot Locker (FL) - Get Report was down 1.6% despite a better-than-expected second quarter. The athletic retailer earned 84 cents a share, 15 cents above estimates, while revenue of $1.7 billion climbed 3.7% and beat expectations by $40 million. Comparable-store sales increased 9.6% compared to an expected 6% increase.

Salesforce.com (CRM) - Get Report climbed 3% after reporting a better-than-expected second quarter and issuing solid guidance. The cloud software developer earned 19 cents a share, a penny higher than forecast, and revenue jumped 23.5% to $1.63 billion.

FedEx (FDX) - Get Report plans to formally launch a $4.8 billion acquisition offer for TNT Express next week, the delivery company said Friday. FedEx expects the offer will pass regulatory approval.