WASHINGTON — Big industry production rose by a strong 0.7 percent in February, an encouraging sign that the nation's manufacturers may be getting a stronger grip on their own recovery.

The increase in output at the nation's factories, mines and utilities came after a 0.8 percent jump in activity in January, the Federal Reserve reported Monday.

But on Wall Street, the good economic news could not overcome continuing jitters about terrorism.

The Dow Jones industrial average fell 137.19, or 1.3 percent, to 10,102.89, its biggest drop since the 160.07 it lost March 10.

Broader stock indicators were also markedly lower. The Standard & Poor's 500 index was down 16.08, or 1.4 percent, at 1,104.49, and the Nasdaq composite index dropped 45.53, or 2.3 percent, to 1,939.20, the biggest drop since Feb. 4.

The Dow and Nasdaq were at their lowest levels since mid-December, while the S&P 500 was at its lowest level since late December.

Monday's session marked the third time in four sessions that the Dow fell more than 100 points, a common occurrence during the bear market but one that Wall Street has not been used to since stocks began their ascent a year ago. Since peaking at 10,737.70 on Feb. 17, the Dow has lost nearly 635 points, or nearly 6 percent.

While analysts had been expecting the market to go through some kind of correction, and prices were in the process of consolidating, the reawakening of terrorism fears has made it clear that Wall Street is in at least a temporary downturn.

Still, last month's industrial production performance was even better than the 0.4 percent increase that some economists were forecasting. Gains were widespread in February, with production rising for automotive products, home electronics, business equipment, machinery, food products and chemicals.

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"This breadth of the recovery bodes well for future production," said Daniel Meckstroth, chief economist at the Manufacturers Alliance/MAPI, a research group.

That's especially goods news for manufacturing, which was hardest hit by the 2001 recession.

The latest snapshot of industrial activity also bodes well for economic growth in the first three months of this year. Analysts believe the economy grew at an annual rate of more than 4.5 percent in the current January-to-March quarter, up from a 4.1 percent pace in the fourth quarter of 2003.

The Federal Reserve's report also showed that production at factories — the biggest slice of industrial output tracked by the Fed — went up by 1 percent in February — a big pickup from January's 0.2 percent increase and the best performance since November.

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