In the U.S., stock futures were down between 0.8% and 1%. Meanwhile, the yield on the 10-year Treasury note nudged back up near 2%, as investors sought safety in government-backed bonds.
Investors were spooked by worse-than-expected Chinese data that showed manufacturing slowed for the first time in seven months, and the latest minutes from the U.S. Federal Reserve's monetary policy meeting.
"We fear that this may get very ugly, very quickly, and that with the usual 5%-7% correction having happened in one day [in Japan], a greater 7%-10% correction... or worse... shall follow," wrote Dennis Gartman, editor and publisher of daily financial newsletter The Gartman Letter.
But markets went into reverse after the Fed's minutes showed that some members were willing to dial down the Fed's bond-buying program as soon as June if the recovery appears sustainable.
On the economic front, the Department of Labor reported that initial claims for unemployment benefits fell to 340,000 last week, down from 363,000 the week before. A report on new home sales is due at 10 a.m. ET.
On the corporate front, Ralph Lauren(RL) is set to report quarterly results in the morning, while Gap(GPS) and Sears Holdings(SHLD) are up after the bell.