Both the Dow Jones Industrial Average and the tech-heavy Nasdaq fell heavily. Finishing at 2345.61, the Nasdaq shed 138.43 points, or 5.6 percent, its second-biggest single-day decline ever. The Dow fell 53.36 points to 10,440.53.
Internet issues took a hard hit in late-day trading fueled by afternoon selling.
Compaq, which yesterday ousted chief executive Eckhard Pfeiffer and lost its chief financial officer, fell .875 to 22.75 on a volume of 38,728,200. The company's shares initially traded up on the news.
The move was precipitated by April 9's surprise warning of a a first-quarter earnings shortfall, which exhausted the company's credibility among financial analysts. Compaq said it was expecting earnings of about 15 cents per share, less than half of the 31 cents projected by First Call financial analysts. Results are expected to be announced on April 21.
Meanwhile, PC hardware stocks that began with mixed results ended by trading weaker. Manufacturers Apple, Gateway, Dell, and IBM all fell markedly. Shares of Apple fell 1.31 to 34.12, Gateway shares fell 2.75 to 61.43, Dell dropped 2.18 to 36.06, and IBM lost 4.62 at 165.75. Shares of Hewlett-Packard rose 1 to 71.37 after spending most of the trading day in the red.
Reuters contributed to this report.