Traders work at the trading floor of the New York Stock Exchange in New York, the United States, on Aug. 15, 2007. The Wall Street traded lower Wednesday morning with the Dow Jones industrials average dropping more than 160 points to lower than 13,000 benchmark after steep losses in the Asian and European markets on concerns of a credit crunch.(Xinhua Photo)
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    BEIJING, Aug. 16 (Xinhuanet) -- U.S. stocks fell again on Wednesday after the Federal Reserve injected more cash to the banking system.

    The market traded nervously, as investors wrestled with reports about potential trouble at Countrywide Financial Corp. (CFC.N) and KKR Financial Holdings LLC, making the Dow Jones industrial average above and below the 13,000 mark throughout the day.

    "The problem is now you shoot first and ask questions later. We've got nervous markets. We're just looking for the next problem," said Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago.

    Shares of CFC.N fell 16.2 percent to 20.51 U.S. dollars on the rumors that the largest U.S. mortgage company had been unable to raise money from the commercial paper market. Countrywide officials were not immediately available for comment. Earlier, Merrill Lynch downgraded the No. 1 U.S. mortgage lender to sell, saying it could face bankruptcy if liquidity worsens.

    By late Wednesday, investors saw little reason to buy despite the fact that stocks were at bargain prices, and the Dow closed down nearly 170 points. The Standard & Poor's 500 index also dropped sharply.

    “I think it's more prudent to allow this correction to continue to unfold” said Linda Duessel, market strategist at Federated Investors in Pittsburgh. "After all, we're in the month of August and coming into September — historically, the weakest months of the year. The market has been in need of a correction."

    A correction is defined as a 10 percent drop in stock prices. The Dow Johns is now more than 8 percent below its record close of 14,000.41, reached July 19.

    Wall Street rebounded Monday morning when the Fed added two billion U.S. dollars in liquidity in a one-day repurchase after injecting 6.4 billion dollars last week.

    The Fed on Wednesday said it would accept a "repo" of 7 billion U.S. dollars, in which it buys that amount in securities from dealers, who then deposit the money into commercial banks.

    Still, the Fed has not indicated that it will free up more cash by cutting the interest rate, a move that many on Wall Street believe could stoke a stock recovery. Inflation has been keeping the central bank from making the cut.

    (Agencies)