The tech-heavy Nasdaq plunged 129.41 points (6.30 per cent) to close at 1,923.37 while the Dow sank 436.37 points (4.10 per cent) to 10,208.25. The Standard and Poor's 500 skidded 53.26 points (4.32 per cent) to 1,180.16.

A profit warning from Swedish telecom maker Ericsson hurt the tech sector that was already reeling from similar warnings last week from Intel and Yahoo.

In addition, an unexpectedly strong February jobs report Friday diminished market hopes that the Federal Reserve will cut interest rates dramatically at or before the Federal Open Market Committee's March 20 meeting. The Nasdaq slumped through a key psychological barrier of 2,000 for the first time since December 1998. The latest decline put the new economy index down more than 60 per cent from the peak over 5,000 just one year ago.

Analysts were divided over whether the carnage was over, and whether the markets had touched bottom. Josephthal, Lyon and Ross chief equities strategist Lary Rice said the Nasdaq is likely to experience a short-term bounce, followed by resumed heavy selling, and suggested the index will find a bottom around 1,600. The eventual (Nasdaq composite) bottom is anyone's guess," Mr Rice said.

(PTI)