NEW YORK (Reuters) - Wall Street reeled Friday from the one-two punch of bad inflation news and unsettling comments by Federal Reserve Chairman Alan Greenspan on the stock market that sent the Dow Jones industrial average briefly spinning below the 10,000 level.

Based on early and unofficial data, the Dow plunged 266.90 points, or 2.59 percent, to 10,019.71, after hitting a low of 9,998.18. The index of 30 blue-chip stocks first punched through the 10,000 level in March and peaked at 11,326.04 on Aug. 25.

The Nasdaq composite index, heavily weighted with technology stocks, tumbled 75.01 points, or 2.67 percent, to 2,731.83.

The Standard & Poor's 500 index declined 36.01 points, or 2.81 percent, to 1,247.41.

In the broader market, declining issues swamped advances by 24 to 7 on active volume of 911 million on the New York Stock Exchange.

``Ten thousand has been an area of very important support for the Dow. This has been a vicious correction,'' said Scott Bleier, chief market strategist for Prime Charter Ltd.

The trigger for the selloff included a government report that U.S. producer prices rose 1.1 percent in September, more than twice what most economists had expected. The core PPI, the Producer Price Index without its more volatile food and energy components, rose 0.8 percent in September.

Financial markets were also upset by comments late Thursday by Fed Chairman Greenspan warning bankers of a potential stock market bubble and advising them to set aside more money as insurance against a big financial market downturn.

``I think people were expecting (the Dow)'' to test the 10,000 bar, said Dan Ascani, president and research director of at Global Market Strategists Inc. in Gainesville, Ga. ``The same thing has been spooking the market all along.''

Many of the factors that helped catapult the Dow over the key 10,000 level in March have abated as commodity prices, particularly oil and gold, have risen sharply in recent months.

Analysts have also pointed to a potential peak in earnings from Corporate America, the declining value of the U.S. dollar, and rising interest rates.

Financials were among the stocks taking the steepest hits. Among the Dow stocks, American Express Co (NYSE:AXP - news). lost 7-3/16 at 134-5/8 and J.P. Morgan & Co Inc. was down 5-3/16