NEW YORK — Stocks plunged yesterday, driving the Dow Jones industrials down more than 240 points to their second-biggest drop in almost four years, as troubles piled up for subprime lenders.

Investors, bracing for a wilting economy, fled the already deflated subprime mortgage sector on more news that lenders New Century Financial Corp., Accredited Home Lenders Holding Co. and General Motors Acceptance Corp.'s residential unit are facing financial problems. The Mortgage Bankers Association bolstered the perception that the struggles are widespread when it said new foreclosures surged to an all-time high in the last quarter of 2006.

All three major stock indexes were down about 2 percent.

Japanese stocks followed suit, and the benchmark Nikkei 225 index fell nearly 3 percent in Tokyo trading today. Hong Kong's Hang Seng index fell 2.6 percent, Indian stocks opened 3.2 percent lower, while Philippine stocks plunged 3.4 percent.

"The market's still jittery, and they're starting to get full-blown concerns over a bleed in the larger subprime mortgage market," said Matt Kelmon, portfolio manager of the Kelmoore Strategy Funds.

Subprime lenders provide mortgages to people with poor credit. Though they are a relatively small part of the U.S. economy, their difficulties raise larger concerns about the housing market, which until its slowdown in recent years was a big source of money for consumers. That, coupled with the Commerce Department's report yesterday that U.S. retailers eked out a meager 0.1 percent rise in sales last month, led Wall Street to reconsider whether Americans' buying power will withstand an economic slowdown.

Yesterday's selloff was accentuated by options expiring soon and by increased volatility since the market's big plunge on Feb. 27 — a 416-point drop in the Dow that was caused partially by the escalating distress among subprime lenders.

The Dow yesterday fell 242.66, or 1.97 percent, to 12,075.96.

The blue-chip index is now down about 710 points, more than 5 percent, from its record close reached Feb. 20.

Subprime lending jitters and sluggish retail sales drove up bond prices. Gold prices fell, and the dollar was lower against most major currencies.

A drop in the dollar versus the yen renewed anxiety about traders unwinding their yen "carry trades" — taking money out of high-yielding dollar assets bought with the low-yielding yen.