Wall Street Plunges Anew

Updated from 4:12 p.m. EDT

Stocks had another back and forth session Wednesday before ultimately closing with steep losses, and the Dow Jones Industrial Average dropped under 13,000 for the first time in four months.

After recovering from an early swoon to rise by as many as 90 points, the Dow gave back all of those gains and more, surrendering 167.45 points, or 1.29%, to 12,861.47. The index last closed below the 13,000 mark on April 24.

Elsewhere, the S&P 500 lost 19.84 points, or 1.39%, at 1406.70, and now is in negative territory for the year. The Nasdaq Composite slid 40.29 points, or 1.61%, to 2458.83.

"The technical conditions are not relevant anymore, as we can't get past the fact that there is a crisis per day," said Larry Wachtel, senior market analyst with Wachovia Securities. "Traders are simply trying to get through the day without an incident in financial stocks. The normal benchmarks, such as yearly gains, have to be thrown out the window."

The action wasn't exactly a surprise for daily market watchers considering the recent volatility, and at the forefront again were continuing jitters about credit.

"Each and every attempt [to go higher] is met with bad news that undermines confidence," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "Now that the major global central banks have dumped liquidity into the market openly, they will be committed to keeping the spigot open."

Some of the ugliest action took place in Countrywide (CFC Quote - Cramer on CFC - Stock Picks), where fears about its health sent the stock down 13% to close at $21.29. Merrill Lynch downgraded the shares all the way to sell from buy, citing the lack of liquidity in the mortgage market.

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