By Corrie Driebusch and Riva Gold 

The Dow Jones Industrial Averaged teetered on the brink of correction territory Friday as disappointing economic data from China and the eurozone sparked a retreat by investors and traders hesitant to enter the weekend with big bets.

A steep drop at the end of a week has become a pattern during the recent stretch of market volatility: The Dow's 516-point fall of 2.1% Friday is among the steepest this month. Two other declines also came a day before the stock market was set to be closed.

Investors and traders say they are uneasy entering a weekend with large bets on stocks in such volatile times, especially because of frequent geopolitical developments when stock markets are closed.

"We have a political machine that's able to communicate any time of the day," said Andrew Slimmon, senior portfolio manager with Morgan Stanley Investment Management. "Who wants to take the risk that something comes up and you're long?"

The Dow Jones Industrial Average declined 24082 from 24598. A close below 24145.55 would put all three major U.S. stock indexes simultaneously in correction territory -- typically defined as a fall of at least 10% from a recent high -- for the first time since March 2016.

The S&P 500 fell 1.6%, and the Nasdaq Composite dropped 1.7%. With those losses, all three indexes are on track to end the week lower.

The declines, led by technology and other companies closely linked to the Chinese and global economy, signaled the weekslong choppiness in markets around the globe isn't over, despite a slight reprieve earlier in the week.

"It's been hard to avoid the damage in the markets the past couple weeks, " said Matthew Forester, chief investment officer at BNY Mellon's Lockwood Advisors. He said he has been favoring bonds with higher credit quality and longer durations, but it has been trickier to shift his stockholdings due to the all-inclusive nature of the selling.

Friday's losses followed a similar pattern, with real estate and utilities shares posting smaller declines than other sectors. They tend to be favored by investors in volatile times for their steady payouts.

Health-care companies were among the worst performers as Johnson & Johnson slumped nearly 10% after Reuters reported the company knew for years that its baby powder sometimes contained asbestos. The drop took about 80 points off the Dow industrials and pushed the S&P's health-care sector down 3%.

Energy stocks in the S&P 500 declined 2.2% as oil prices resumed their slide. U.S. crude dropped 2.8% to $51.12 a barrel.

The selloff came as data showed China's economic downturn deepened last month more than economists expected, as Beijing works to halt a slowdown while grappling with a trade conflict.

Official figures showed a November slowdown in industrial production amid issues among auto makers and property markets, while growth in retail sales dropped to its lowest level in more than 15 years.

"For a while, the Chinese economy was the extra bit that kept the global total going," said Alastair Winter, chief economist at Daniel Stewart & Co.

Mao Shengyong, a spokesman for China's National Bureau of Statistics, said China's economic growth was nonetheless on track to achieve its annual target in 2018.

Hong Kong's Hang Seng Index fell 1.6%, while the Nikkei Stock Average lost 2%. Declines spread to European markets, where the Stoxx Europe 600 lost 0.6%.

Adding to the downbeat tone, purchasing managers' surveys separately showed that French business activity unexpectedly contracted for the first time in 2 1/2 years, according to IHS Markit, while German's composite purchasing managers index reached its lowest level in four years.

That came a day after the European Central Bank cut its economic growth forecasts, highlighting the climate of uncertainty around trade tensions and market volatility.

Worries about world growth and trade relations have contributed to steep swings in stock and bonds markets recently, even as the U.S. economy has been relatively steady.

The concerns have sparked a broad retreat from risky assets. In the week through Wednesday, investors withdrew record amounts from global equity funds, according to EPFR Global.

Friday's moves came after world stocks had rebounded earlier this week as The Wall Street Journal reported that China was set to introduce an industrial policy that is friendlier to foreign businesses. President Trump said on Twitter earlier in the week that "productive" trade talks were under way.

Many economists expect the trade conflict to continue despite a 90-day tariff truce that Mr. Trump and his Chinese counterpart, Xi Jinping, reached in early December.

Write to Corrie Driebusch at corrie.driebusch@wsj.com and Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

December 14, 2018 15:33 ET (20:33 GMT)

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