The Nasdaq composite index slid 60.69 to 2,080.11, and the Dow Jones industrial average dropped 91.25 to 10,479.86.
Britain's Marconi plunged $3.68, or 52 percent, to $3.35, dragging down the networking and telecommunications sectors. The company warned that earnings will be cut in half this year, and it will chop another 4,000 jobs because of the global telecommunications industry slowdown.
Fellow telecommunications equipment stocks suffered. CNET's Telecom Equipment index was down 4.03 percent, with Ericsson shedding 61 cents to $4.93, Vodafone down 88 cents to $21.75, and Nokia down $1.85 to $20.35.
The news also affected the networking sector. Lucent Technologies fell 39 cents to $6.30, Nortel Networks dropped 50 cents to $8.60 and Cisco Systems fell $1.59 to $17.60. CNET's Networking index was down 4.64 percent.
In other telecommunications news, WorldCom trimmed its earnings projections for 2001 Thursday, as it restructured its accounting for a 19 percent stake in Embratel. Shares dropped 19 cents to $14.28.
ASML Holdings sank $1.42 to $20.80 after the Dutch semiconductor-equipment maker said it expected a first-half net loss. The company said a sharp decline in profits at its U.S. unit was to blame.
Other companies warning included Parametric Technology, a maker of product-manufacturing software. The company said it expects a big shortfall in earnings and revenue for the third quarter. Shares were down $2.24 to $10.13.
Among technology bellwethers, Microsoft fell $1.97 to $68.50, Oracle lost 84 cents to $18.93 and Intel lost 62 cents to $29.84.
Amazon.com rose $1.14 to $15.27; AOL Time Warner dropped $1.40 to $51.36 and Yahoo shed 62 cents to $19.19.
Staff and Reuters contributed to this report.