In afternoon trading on Wall Street, the Dow Jones industrial average was down 307.77, or by 2.7 percent, at 11,049.74. The Standard & Poor's 500 index was off 47.03, or 3.2 percent, at 1,408.19, and the Nasdaq composite index was down 173.03, or 4.2 percent, at 3,958.12.

Investors continued selling that began Monday as the market grew concerned that, now that concerns about Year 2000 computer bugs have passed, the nation's robust economic growth will prompt the Federal Reserve to raise interest rates.

Many investors now believe the Fed will raise interest rates at its next meeting on Feb. 1 and 2. The Fed left rates unchanged at its last meeting, hoping to ensure monetary stability while Y2K concerns played out around the world.

U.S. markets took little notice of President Clinton's renomination of Alan Greenspan for another term as chairman of the Federal Reserve System. The announcement was widely expected.

But some of today's selling was also due to the fact that traders who enjoyed big gains at the end of 1999 can, with the arrival of the new year, take profits without having to pay taxes on their gains until 2001.

Analysts said a pullback after the market's December rally was expected.

"The market has had a very strong run," said Richard E. Cripps, chief market strategist for Legg Mason in Baltimore. "Higher interest rates are providing a catalyst for some selling that probably needs to take place before it can go any higher."

The selloff wasn't limited to the United States.

In Britain, where trading resumed today for the first time after a long New Year's holiday, the main index of the London Stock Exchange had its biggest daily point loss ever, dropping 264.3 points, or by 3.8 percent.

It was not the biggest percentage loss, however. London's Financial Times-Stock Exchange 100-share index had plunged 12.2 percent on Oct. 27, 1987, when it had its previous largest point loss, a drop of 250.7.