NEW YORK (AP) — Stocks plunged again yesterday as more investors woke up to the possibility that economic problems such as Europe's debt crisis might spread around the world and stop the growing recovery in the US.

The Dow Jones industrial average fell 376 points, its biggest one-day point drop since February 2009, and all the major indexes were down well over three percent. Meanwhile, interest rates fell sharply in the Treasury market as investors once again sought the safety of US government debt.

With yesterday's drop, the Standard & Poor's 500 index, considered the best indicator of the stock market's performance, is down almost 12 percent from its 2010 high close of 1,217.28, reached on April 23. That means the market is officially in what's called a correction, a drop of 10 percent or more from a recent high. This is the first correction since stock indexes hit 12-year lows in March last year. The fact it has occurred in just 19 trading days shows how anxious traders are right now.

Analysts said there was no big event to set off yesterday's selling. More investors seemed to be grasping the possibility that the US recovery could be in jeopardy. And many were wondering whether the stock market's big rebound since March 2009 may not have been entirely justified.

"The economic recovery story has started to look like a mirage and the new reality is a return to credit crunch conditions" like those seen during the financial crisis, said Tom Samuels, manager of the Palantir Fund in Houston. "If that's correct, stock prices are well ahead of economic reality."

Investors are concerned that the debt problems in European nations like Greece and Portugal will spill over to other countries, cause a cascade of massive losses for big banks and in turn halt the economic recovery in countries beyond Europe, including the US.

They're also worried that China might take steps that will limit its economic growth, which would also affect the US recovery. Analysts said the market is vulnerable to rumours about any of the major economies right now.

Investors appear increasingly convinced that European countries will need to adopt stringent spending cuts to pay down their heavy debt loads, independent market analyst Edward Yardeni said. Such cuts would likely to lead to long economic slump for those countries, a prospect that investors may now be accepting as reality as they sell stocks and the euro, the currency shared by 16 European nations, Yardeni said.

The euro, which has become a key indicator of confidence in Europe's economy, managed to rise to $1.2496 in late afternoon trading, a day after hitting $1.2146, a four-year low. But its advance didn't help stocks.

"The drop in the euro is the initial phase of a long-term, multi-year economic decline in Europe," Yardeni said. "It shows a declining confidence in the workability of the EU (European Union) monetary union, and that's why their stock markets are down."

"It's starting to look like one of these tragic stories were one person falls through the ice, then everyone else rushes in to help and ends up drowning," he added.

The market's slide over the past four weeks on worries about the global economy has been a painful reminder of the turbulent days during the 2008 financial crisis. On April 26, the Dow closed at its highest point since the market hit bottom on March 9, 2009.

Since then, it has fallen nearly 1,000 points. It has fallen by at least 100 points in nine of the 18 trading days since its peak.

The Dow fell 376.36, or 3.6 percent, to 10,068.01. The S&P 500 fell 43.46, or 3.9 percent, to 1,071.59. The Nasdaq composite index fell 94.36, or 4.1 percent, to 2,204.01.

At the New York Stock Exchange, only 153 stocks rose compared with 2,994 that fell. Volume came to a heavy 2.1 billion shares.

The market got some confirmation from a Federal Reserve official that Europe's problems could be a "potentially serious setback". Fed Governor Daniel Tarullo said that if the debt crisis curbed lending and the flow of credit globally, that would endanger both the US and global recoveries, he says.

"Although we view such a development as unlikely, the swoon in global financial markets earlier this month suggests it is not out of the question," he said in prepared remarks.