Basic materials shares and exchange traded funds (ETFs) took a dive on Thursday, as a preliminary gauge of China’s manufacturing report indicated a slower growth rate.

The Market Vectors Steel Index Fund (NYSEArca: SLX) plunged almost 9% on Thursday due to the negative global market sentiment. The fund was slightly up 0.52% last check Friday.

The HSBC preliminary China manufactures purchasing index was down to 49.4 as of September, according to HSBC Holdings PLC, reports Aaron Back on The WSJ. A reading above 50 indicates expansion, and under 50 indicates a slowdown. An economic slowdown in the world’s second largest economy is igniting concern about the health of the overall economic picture. [Will Steel Dynamic Earnings Reinforce ETFs?]

However, the data may indicate a “soft landing,” Qu Hongbin, HSBC economist, wrote in a note. “Fears of a hard landing are unwarranted. External demand weakened a little but official trade data still show solid export growth.” [The Contrarian: A Look at oversold ETFs]

Basic materials shares were leading the losses within the S&P 500, some trading at 6.13% lower. Many shares in the basic materials sector are prone to volatile raw material and energy prices and are part of a cyclical industry, explains Robert Goldsborough, analyst for Morningstar. Many of the companies in basic materials ETFs produce commodity products.