Stocks plunge as worries about Europe intensify

The problems that weighed down stocks all summer show no sign of letting up.

U.S. stocks plunged today, erasing the week’s gains, as rising fears about fallout from Europe’s debt crisis overshadowed President Barack Obama’s plan to revive the U.S. job market.

The resignation of a key official from the European Central Bank was the latest sign of deepening disagreement over how to solve Europe’ economic problems. And it’s not clear to traders that the president’s jobs plan can pass through a divided Congress.

Traders fear that Europe’s failure to address its debt crisis might tip the world economy back into recession. They pushed the Dow Jones industrial average to its steepest decline in more than three weeks of wild swings.

“Markets always vacillate between fear and greed, and today we’re coming down pretty much all on the fear side,” said Kim Caughey Forrest, equity research analyst at Fort Pitt Capital Group.

Shortly after 1:30 p.m., the Dow lost 309 points, or 2.7 percent, to 10,987. The Standard & Poor’s 500 index fell 31, or 2.6 percent, to 1,155. The Nasdaq composite index slipped 58, or 2.3 percent, to 2,471.

All three indexes are lower for the week. The Dow is down more than 2 percent. It has fallen in five of the past six weeks, and four of the past five trading sessions.