NEW YORK - Stocks plunged Friday, erasing all of the previous day's big gains, as a drop in consumer spending fanned worries that the economic recovery won't be sustainable.

Major stock indexes tumbled more than 2 percent in early afternoon trading, including the Dow Jones industrials, which gave back all of Thursday's 200-point gain. The biggest declines were among banks, energy and materials companies.

As stocks fell, investors moved to safer assets like the dollar and Treasurys.

Investors started shedding stocks after the Labor Department said personal spending fell 0.5 percent in September. Though the decline was in line with forecasts, it was the largest drop in nine months and followed a 1.3 percent jump in August fueled by the government's popular Cash for Clunkers car rebate program.

The decline marked an about-face for the market, which had rallied on Thursday after the government reported a 3.5 percent jump in gross domestic product in the third quarter. The stronger-than-expected growth came after four straight quarters of declines and was the most promising evidence yet that the longest recession since the 1930s has ended.

However many economists worry that much of that growth came from government stimulus measures, and that without a rebound in consumer spending the economic recovery won't be sustainable.

"I think you have a market that is ultimately looking for its direction," said Bob Froehlich, senior managing director at Hartford Financial Services. "We really are at the inflection point. You tend to have an overreaction to both extremes."

A drop in the mood of consumers added to the day's bad news. The Reuters/University of Michigan consumer sentiment index fell to 70.6 in October from 73.5 in September. The reading was revised slightly higher from a preliminary estimate of 69.4 earlier this month, and was roughly in line with expectations.

The market is paying close attention to indicators of consumer spending, which is still in a slump despite improvements in other parts of the economy such as manufacturing and housing. Spending by consumers makes up a major part of the U.S. economy.

The Dow fell 221.51, or 2.2 percent, to 9,741.07. The Standard & Poor's 500 index fell 26.18, or 2.5 percent, to 1,039.93, and the Nasdaq composite index dropped 46.69, or 2.2 percent, to 2,050.86.

Friday marks the end of the fiscal year for many mutual funds, which could be adding to the selling pressure in the market, analysts said.