NEW YORK, OCT. 16 -- The stock market took its deepest plunge yet today -- 108.36 points on the Dow Jones industrial average -- in frenzied trading, capping a disastrous week that left many on Wall Street battered, poorer and nervous about what may lie ahead.

The Dow's decline, which took it to 2246.73, eclipsed Wednesday's drop of 95.46 points, the previous record for a one-day loss. For the week the Dow dropped 235 points, or 9.5 percent.

Investors and analysts attributed today's heavy retreat to snowballing fears that the stock market's huge five-year rally may be ending. They also worried that the sharp selloff may roll into other financial markets around the world or undermine the growth of the U.S. economy.

Today's market dive took place on the busiest day in New York Stock Exchange history, as 343.4 million shares changed hands, far surpassing the record of 302.4 million shares set on Jan. 23.

"This clearly has global implications. This is not just some isolated correction," said H. Nicolaas Millward, managing director of S.G. Warburg & Co., a major British investment firm.

"You can't suspend the laws of gravity forever," said Felix Rohatyn, senior partner at Lazard Freres & Co., a Wall Street investment banking house. "Some day there was going to be a day of reckoning. I don't know if this is the beginning of the reckoning {but} at least it's a sobering recognition that elevators don't always go up."

Others on Wall Street expressed cautious optimism, arguing that the mixed economic outlook of rising interest rates and moderate inflation offered no fundamental reason why the stock market could not recover strongly.

Even with this week's sharp decline, they noted, the market is still considerably higher than its level at the beginning of the year. And in percentage terms, the sudden dips in prices this week pale in comparison with the one-day declines that occurred during the stock market crash of 1929.

But even the optimists agreed that it will be difficult for the market to quickly overcome the perception among investors that more trouble is in store.

Technical market analysts said there were indications in trading today that the market's slide had not yet run its course. They said that investors have not yet abandoned bargain-hunting in stocks, a turn that they said often comes during the final "capitulation phase" of a rapid market collapse.

"That's where we have a problem over the near term," said Joseph Barthel, director of technical market strategy at Butcher & Singer Inc. "When we get that capitulation, then we would at least think you'd have an opportunity to buy selected stocks."

For months, a growing number of investors and portfolio managers have argued that the stock market was substantially overpriced, fueled by takeover activity and short-term, speculative investing.

Analysts said today that as interest rates neared 10 percent this week, foreigners and large U.S. institutions, who had been the backbone of the bull market, began to flee stock investments for bonds.

Joe Rosenberg, senior portfolio manager for Loews Corp., a major corporate investor, said that this week's stock market decline was inevitable because the price of the Dow stocks had far outstripped the earning power of the country's largest corporations.

"Stocks have been selling {for a price of} 20 times earnings with the lowest yield in this century. How could anyone say that stocks were the place to be? The only thing that surprises me is that the market took so long to recognize this," Rosenberg said.

Even as stock prices were skyrocketing, the bond market has been declining steadily during the year, Rosenberg noted, making bonds a relatively attractive investment. "The stock market is not paying me to take the risk," he said.

Feeding fears that the market's sharp decline this week might portend serious trouble in the economy, rather than a temporary dip in stock prices, was the early and accelerated decline in the price of consumer stocks, such as retail chains. Stocks such as The Gap Inc. and K mart Corp. were falling sharply before the broader market decline began.

"I think it's significant in that even before the stock market began to decline, consumer spending was slowing," said Steve Einhorn, partner and cochairman of investment policy at Goldman, Sachs & Co., a large Wall Street investment banking firm. "There is a risk that if this decline takes on added downside momentum, it could further impact consumer spending."

Einhorn added that he does not expect such a rollover into the economy to occur, but said, "The fundamentals that brought the market down are still in place. And that suggests that the market will not be a very {attractive} place over the next couple of months. Respectable gains in the market seem unlikely."

The Dow has fallen 475.5 points, or 17.5 percent, since it peaked at 2722.42 on Aug. 25. Almost half the decline occurred this week, producing the deepest drop in prices since the stock market began its heady upward run in 1982.

As it has on previous days of heavy losses, the market went into a free-fall during the last hour of trading today, pushed down in part by computerized stock trading programs. At one point, the Dow was down 127 points, but then recovered some of that ground before the closing bell.

Declining stocks outnumbered advancing ones on the New York Stock Exchange today by a huge 17 to 1 margin.

Besides the Dow, four other popular stock market indexes experienced record one-day drops. The Standard & Poor's 500 index fell 15.14 to 282.94; the NYSE composite index dropped 8.32 to 159.13; the American Stock Exchange index was off 12.25 to 323.55; and the Nasdaq composite index dove 16.18 to 406.33.

The bond market was firm today, as was the Dow utility average, an interest rate-sensitive index. The price of gold shot up more than $8 an ounce in active trading that dealers said was driven mainly by the stock market's fall.

Stocks of companies involved in takeovers were some of the hardest hit today, leaving professional takeover speculators, known as abritrageurs, with large losses. Santa Fe Southern Pacific Corp., for example, which said it has received seven offers for its Southern Pacific subsidiary, was down $5.25 to $51.125.

Newmont Mining Corp., target of a T. Boone Pickens, Jr.-led takeover attempt, won a Delaware state court victory against a Pickens partnership and then saw its share price plunge by $13 in the general market selloff. Dayton Hudson Corp., which is being pursued by Washington's Haft family, was off $4.75 to $45.

By day's end, gallows humor began to circulate among the young Wall Street traders and investors who have enjoyed nearly unbridled financial success during the last five years.

One popular joke: "What do you call a yuppie arbitrageur?"

Answer: "Waiter."