Slaughter on Wall Street

Updated from 4:08 p.m. EST

Sellers were out in full force Tuesday as worries about the strength of the U.S. economy and weakness overseas sent stocks in New York to massive losses.

The Dow Jones Industrial Average sank 416.02 points, or 3.29%, to 12,216.24, its worst single-day pullback since the market reopened six days after the terrorist attacks of Sept. 11, 2001.

Around 3 p.m. EST, the industrials, already down more than 200 points, dropped precipitously in a matter of minutes, due in part to what appears to have been a heavy backlog of sell orders that had temporarily clogged the system. At one point, the Dow slumped 546 points before rebounding slightly.

Meanwhile, the Nasdaq Composite plunged 96.65 points, or 3.86%, to 2407.87, and the S&P 500 gave back 50.33 points, or 3.47%, to 1399.04.

Both the Dow and the S&P 500 are now in negative territory for 2007. The Nasdaq remains slightly above the unchanged mark for the year.

Because of the steepness of the losses, trading curbs went in effect on the New York Stock Exchange, where volume reached a record level.

"Normally, when circuit breakers kick in to stop us from selling, we get a bounce," said Paul Mendelsohn, chief investment strategist with Windham Financial. "However, a whole queue of sell orders hit the system. That is not a good omen when the circuit breakers don't bring us back. We dropped in a matter of minutes. This is not supposed to happen."