The sell-off wasn't surprising as the GDP news confirmed investors' fears about a frail economy. But the larger issue was the market's concern that a war with Iraq would further suppress an already weak economic recovery, which is what has been prompting investors to sell off shares for more than two weeks.

"That's at the top of the anxiety list for investors," said David Sowerby, chief market analyst at Loomis, Sayles & Co. in Detroit.

The Dow closed down 165.58, or 2 percent, at 7,945.13, according to preliminary calculations. The Dow more than wiped out a gain of 121.15 from the previous two sessions, its first multiple-day winning streak in two weeks.

The blue chip average closed back below the 8,000 level, as it did Monday for the first time in three months, or since Oct. 14, when it stood at 7,877.40

The broader market also fell sharply. The Nasdaq composite index sank 35.96, or 2.7 percent, to 1,322.10. The Standard & Poor's 500 index slid 19.79, or 2.3 percent, to 844.57.

All three indexes suffered their eighth decline in 11 sessions. For the Dow, all but one of its eight losing sessions resulted in a triple-digit loss. Over the past 11 sessions, the Dow has plummeted 897.49.

Investors were disheartened by news that the economy grew at a slow pace in the fourth quarter. The Commerce Department reported that the economy as measured by the gross domestic product grew at an annual rate of just 0.7 percent in the final three months of 2002 as consumers buckled in the face of war worries, a third year of stock market declines and a dismal job climate.

The GDP performance missed analysts expectations for a 0.9 percent increase and was a big decrease from the 4 percent growth rate registered in the third quarter.

But analysts said investors are more concerned about the prospects of war with Iraq than they are on economic data that they already expect to be dismal.

Analysts don't expect the market or the economy to rebound until it is clear whether there will be a war and how the United States fares in it.

"You can't separate the two," said Arthur Hogan, chief market analyst at Jefferies & Co. "Geopolitically, we have this overhang of war, and fundamentally what that causes is high prices for oil and high demand for gold and for bonds but none for stocks."

Having heard President Bush say in his State of the Union address that a war is more certain, investors are now focused on Secretary of State Colin Powell's scheduled appearance before the U.N. Security Council. Next Wednesday, Powell is due to discuss new intelligence information on Iraq.

AOL Time Warner fell $1.96 to $12 after announcing late Wednesday it lost $44.9 billion, or $10.04 a share, in the fourth quarter. But after a $45.5 billion charge to account for the media giant's plummeting value, AOL met expectations with earnings of 28 cents a share. The company also announced that vice chairman Ted Turner was stepping down.

Gillette fell 60 cents to $29.50 after the consumer products maker missed earnings expectations by 2 cents a share.