(Reuters) - U.S. stocks plunged suddenly but briefly by more than 9 percent on Thursday afternoon before pulling back to a near 3 percent drop, as investor worries mounted that Greece's debt problems could spread.
The Dow and Nasdaq indexes at one point sank heavily after 2 p.m., while the S&P 500 and Dow briefly fell into negative territory for the year.
Trading was volatile, though the New York Stock Exchange said there were no system errors during the brief but heavy sell-off.
Investors were disappointed the European Central Bank failed to take fresh measures to help stem Greece's debt crisis. The ECB did not discuss the outright purchase of European sovereign debt, as some had hoped for, but gave verbal support instead to Greece's savings plan. The ECB left interest rates at a record low.
Germany's Bundestag lower house of parliament is due to start debating a draft law on the German contribution to an aid package for Greece at 0700 GMT on Friday.
"Nobody knows what is going to happen overnight, and so people were running for cover in here and it just got a little ahead of itself," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
The Dow Jones industrial average was down 355.20 points, or 3.27 percent, at 10,512.92. The Standard & Poor's 500 Index was down 38.87 points, or 3.33 percent, at 1,127.03. The Nasdaq Composite Index was down 80.93 points, or 3.37 percent, at 2,321.36.
Volume reached the highest levels since May 2009 during the sell-off.
The CBOE volatility index rocketed up more than 60 percent at 39.94, its highest level since April 2009.
(Additional reporting by Chuck Mikolajczak; Editing by Padraic Cassidy)