Shares in New York have fallen heavily because of new worries about corporate profits.

The market was not in the mood to have GE taken down and punished in public

Charles Pradilla SG Cowen Securities

The Dow Jones index of leading shares fell more than 200 points to a new five-year low of 7,285, and the broader market also dropped sharply.

London and the other European markets could well respond by heading lower on Thursday morning.

London's FTSE 100 index of leading shares closed up 12 points at 3742 on Wednesday, but at that time the Dow Jones was only 124 points lower.

Credit worries

The sell-off increased after analysts issued negative comments about Ford Motor Company and General Electric.

Financial stocks were also hit hard because of concerns about the business outlook for JP Morgan Chase.

"Seems to me that the story is the financial services areas, and GE and Ford Motor.

"Investors seem a bit concerned about credit in the United States," said Val Jensen, president of The Jensen Portfolio.

Nervous investors

General Electric's shares fell $1.39, about 6%, to $21.96, after Morgan Stanley said the conglomerate "could be walking into the most difficult operating environment that GE has experienced in at least a couple of decades."

"The real problem has been across the board," said Charles Pradilla, chief investment strategist at SG Cowen Securities.

"GE is seen as a paragon of American companies. The market was not in the mood to have GE taken down and punished in public," he added.

Analysts say investors have become increasingly nervous about the fragile economic recovery and tensions with Iraq, leading to more than six straight weeks of declines on Wall Street.