U.S. stock markets plunged, in tandem with European bourses, after fears were raised that a referendum proposed by the Greek Prime Minister George Papandreou on the latest Eurozone rescue deal would not be approved by the public.

Worries are spiraling that if Greece defaults, the contagion could spread across Europe and ultimately hurt the U.S.

The Dow Jones Industrial Average dropped 297.05 points, or 2.48 percent, to 11,657.96; the Nasdaq lost 77.45 points, or 2.89 points, to 2,606.96; while the S&P 500 index slid 35.02 points, or 2.79 percent, to 1,218.28.

At one point, the Dow was down as much as 320 points.

European markets delivered even larger drops – the FTSE-100 index of the UK fell 2.21 percent; Germany’s DAX dropped 5.00 percent while the CAC-40 of France erased 5.38 percent.

The major US banks were particularly hammered.

JPMorgan Chase (NYSE: JPM) plummeted 5.90 percent, while Morgan Stanley (NYSE: MS) tumbled almost 8 percent,

Also, general Motors (NYSEL GM) plunged 9.75 percent after the automaker posted lower-than-expected October sales.

Bond prices surged as the yield on the 10-Year Treasury Note slid to 2.00 percent from 2.16 percent – a stunning one-day drop.

Oil futures dropped 1.66 percent in New York.