American stocks tumbled as subprime mortgage contagion and hedge fund losses halted a three-day rally and sent brokerage shares to their worst rout since 2002.

“The fear is feeding on itself,” chief market strategist at LPL Financial Services in Boston who helps oversee more than $173 billion, Jeffrey Kleintop, said. “It’s what you don’t know that seems to be taking over the market.”

Citigroup Inc., JPMorgan Chase & Co., and Goldman Sachs Group Inc. led the declines after France’s biggest bank, BNP Paribas SA, barred withdrawals from funds that owned subprime loans. The Dow Jones Industrial Average fell 387 points and the S&P 500 slid 3%, their worst declines since a February 27 drop spurred by a sell-off in China.

The S&P 500 decreased 44.4 to 1453.09, while the Dow average fell 2.8% to 13,270.68. The Nasdaq Composite Index slipped 56.49, or 2.2%, to 2556.49. A gauge of stock market volatility rose to a four-year high.

Stock-market swings have been more pronounced this year versus last. The S&P 500 has gained or lost at least 2% on six days. That only happened twice all of last year.

Losses swept through all 18 western European markets and wiped out more than half of a three-day recovery in American markets. A jump in rates charged for overnight loans and speculation that more banks and brokerages will report declining values in credit investments exacerbated the selling.

Britain’s FTSE 100 slid 1.9% and Germany’s DAX decreased 2%. France’s CAC 40 lost 2.2%. Brazil’s Bovespa retreated 3.3%.