Stocks fell sharply yesterday, knocking the Nasdaq Composite Index to a 28-month low and dropping the broad market into bear territory after technology giant Cisco Systems said it would lay off thousands of workers because of the weak American economy.

The Nasdaq index slumped 128.28 points to 1,924.5, according to the latest data. It was the lowest finish since November 1998. More than half of the Nasdaq's 25 most active stocks slammed to 52-week lows.

The Dow Jones Industrial average suffered its fifth largest point drop ever, with a 436.37-point tumble at 10,208.25. It was the lowest close for the blue-chip average since late October 2000.

The Standard & Poor's 500 closed at 1,180.18, down 53.24 points, putting the broad market measure into bear territory, having finished 20 per cent below the all-time closing high of 1,527.5 set on March 24th, 2000.