The dread that has sent stocks tumbling over the past four weeks intensified after Friday’s employment report from the Labor Department — the U.S. gained 288,000 new jobs in April. Investors feared the news would prompt the Federal Reserve to raise rates as early as next month, and selling spread around the globe today, sending overseas markets tumbling as well.

"Of course, psychologically, Dow 10,000 has some short-term effects on the market," said Stuart Freeman, chief equity strategist for A.G. Edwards & Sons. "Long-term, the markets still look at corporate fundamentals, earnings, that sort of thing. But we do have some inflation and interest rate fears in play which could keep things lower, at least for now."

According to preliminary calculations, the Dow fell 127.32, or 1.3 percent, to 9,990.02 in heavy volume on the New York Stock Exchange. At one point, the Dow had been down 183.11. It was the lowest close for the Dow since Dec. 10, the last time the Dow closed below 10,000.

Broader stock indicators were also sharply lower. The Standard & Poor’s 500 index was down 11.59, or 1 percent, at 1,087.11, its lowest point since Dec. 17. The Nasdaq composite index dropped 21.89, or 1.1 percent, to 1,896.07. The Nasdaq last closed below 1,900 on Nov. 21.

Since Wednesday’s close, the three major indexes have fallen sharply. The Dow is down 320.93, or 3.1 percent, the S&P 500 has tumbled 34.42, or 3.1 percent, and the Nasdaq has fallen 61.19, or 3.1 percent.

Wall Street has been gripped by a spasm of selling for four weeks as economic indicators grew more positive and investors worried that corporate profits would be eroded by an ensuing series of interest rate hikes. Along the way, the market completely ignored a stellar batch of first-quarter earnings reports.

"Investors do have some incentive to lock in gains," Freeman said. "Stocks have done very, very well over the past 12 months, and this could be as good as it gets for the next few months. And you’re seeing a lot of rotation into traditionally defensive sectors such as healthcare and consumer staples."

Indeed, investors sent healthcare giant Johnson & Johnson up 15 cents at $55.45, while retailer Wal-Mart Stores Inc. rose $1.32 to $55.22.

A number of industry bellwethers, including Dell Inc., Wal-Mart and Cisco Systems Inc., were expected to release earnings later this week. The latest Consumer Price Index report, a key measure of inflation, is also due on Friday.

"If we get positive news from Cisco and the CPI, that could set the stage for improvement over the next few weeks," said Michael Sheldon, chief market strategist at Spencer Clarke LLC. "It’s not all doom and gloom, but investors need to pay more attention to risk preservation here until the investing environment turns a little more positive."

There may be some relief in sight at the gas pumps, as Saudi Arabia’s oil minister today called on other oil producing nations to increase production. The call had a negative effect on petroleum stocks, with ChevronTexaco Corp. shedding $2.48 to $89.17 and Exxon Mobil Corp. losing $1.20 to $42.05.

Citigroup skidded $1.31 to $45.41 after it agreed to pay $2.65 billion to settle investor class-action lawsuits stemming from the WorldCom Inc. scandal. The company also set aside another $6.7 billion for potential claims from former Enron Corp. investors.

SunTrust Banks Inc., once thought of as a potential takeover target, joined the merger trend in the financial sector with a $6.98 billion bid for National Commerce Financial Corp., which would create the nation’s seventh largest bank. SunTrust lost $5.08 to $61.80, while National Commerce fell 70 cents to $31.10.

Cable television giant Cablevision Systems Corp. shed 67 cents to $20.95 after reporting a less-than-expected loss, while rival Charter Communications Inc. was down 25 cents at $3.61 after it fell below Wall Street expectations for its quarterly loss.

Declining issues outnumbered advancers by about 8 to 1 on the NYSE, where volume came to 1.91 billion shares, compared to 1.65 billion at the same point Friday.

The Russell 2000 index of smaller companies dropped 10.70, or 2 percent, to 537.86.