The Dow Jones industrial average sank more than 247 points yesterday as computer-driven selling and fears that the bull market has overvalued stocks sent prices spiralling.

The Dow ended 247.37 points down to 7,694.66, a drop of 3.1 per cent - its lowest level in nearly seven weeks in a plunge that annihilated Thursday's modest gains.

The retreat pulled the Dow nearly 550 points back from its record high of 8,259.31 just seven sessions earlier.

Declines outnumbered advances by a nearly 3-to-1 margin on the New York Stock Exchange, with 187 up, 341 down and 184 unchanged.