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The Dow and the Nasdaq saw their biggest one-day percentage declines in nearly year amid fresh signs of a recession. The Dow tumbled 370 points The S&P 500 dropped 44 points. And the Nasdaq fell 73 points. The intense selling pressure started before the opening bell on word of a contraction in the service sector. The Institute for Supply Management said its January index, whose vastness covers everything from financial services to retail to travel, slumped to its lowest point seen since the last recession. The magnitude of the drop caught Wall Street off-guard resulting in the 3 percent drop in the stock market. Sam Stovall is chief investment strategist at Standard & Poor's. Soundbite: Sam Stovall, chief investment strategist, Standard & Poor's (English) saying: 'Most people had expected the number to be lower, but few expected it to dip below 50 and be in recessionary territory and to be down as much as it currently is. I think it is causing investors to have to reassess how deep this potential recession might be." That also caused investors to re-think their tolerance for financial stocks. Banks and other financial service companies may already be seeing weaker demand for loans and other financial products. Looking at the nation's largest players -- - Citigroup was down 7.4 percent. Bank of America was down 3.7 percent. And JP Morgan Chase lost 5 percent. Another emergency rate cut by the Federal Reserve is in the works, according to Merrill Lynch. But at least one policy maker said the threat of higher inflation is preventing the Fed from being even more aggressive. Treasury yields fell as a result of the turmoil in the stock market. But the dollar surprisingly traded to the upside as the euro took a beating. The European services sector made a turn for the worse last month. That also caused stocks there to take a free fall. The German Dax tumbled 3.3 percent. The Paris CAC-40 tumbled roughly 4 percent. The London FTSE lost 2.6 percent. Conway Gittens, Reuters.