US stocks plunged on Wednesday as bearish economic data spooked investors, raising concerns about the current economic soft patch.

The S&P 500 Index fell 26.78 points, or 1.99 percent, to trade at 1,318.42 at 3:30 p.m. ET. The Dow Jones Industrial Average dropped 251.57 points, or 2.00 percent, to trade at 12,318.22. The Nasdaq Composite declined 2.01 percent.

On Wednesday, economic data arguably went from just soft to outright bad. The ADP non-farm employment report showed only a 38,000 payrolls gain for May while economists expected 175,000 in gains. This weak report spooked traders ahead of Friday’s all-important BLS jobs report.

Meanwhile, the May ISM Manufacturing PMI fell to 53.5. While that still indicates expansion, the pace has slowed significantly from the previous month and came in below expectations.

There are other worries. Fears of Greek default remain (despite Germany’s softer stance), the US budget deficit and debt ceiling looms in the coming months, and QE2 will end on June 30, 2011.

“Economic indicators continue to show the economy is re-entering a downward spiral…With the expected end of QE2 within reach, the US economy is about to be in a situation where its only form of life-support is ripped away from it,” said Douglas Borthwick of Connecticut-based Faros Trading.