By JOE BEL BRUNO
The Associated Press

NEW YORK - Wall Street plunged again Thursday, extending an almost relentless downward spiral after problems at Countrywide Financial Corp. confirmed investors’ fears that credit problems are spreading. The market shrugged off the Federal Reserve’s injection of $17 billion into the banking system, and the Dow Jones industrial average fell more than 300 points.

Investors’ confidence, already diminished by months of bad news about mortgages and credit, took a further pummeling after Countrywide, the nation’s largest mortgage lender, said it was forced to draw on an $11.5 billion credit line to fund operations.

The Dow’s drop pulled the blue chip index into what’s known on Wall Street as a correction, a 10 percent drop in stock prices from their highs. Since the Dow reached a closing high of 14,000.41 on July 19, it has fallen 1,364 points.

The market seemed unfazed as the New York Fed - which carries out the central bank’s market operation - announced an overnight repurchase agreement worth $12 billion. This was on top of a 14-day “repo” worth $5 billion announced before the market opened.

Central banks around the world have been supplying billions of funds to banks in the past week to make cash available for lending and keep interest rates from rising amid signs that credit was drying up. The Fed uses a repo to buy securities from dealers, who then deposit the money into commercial banks.

But, it has done little to offset fears about steeper losses for financial institutions squeezed by weeks of volatility that showed no signs of abating. Analysts contend many institutional investors want the Fed to be even more decisive.

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