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U.S. stocks fell sharply today on signs of further deterioration in credit conditions and the potential impact on the economy and profits.

The latest blow to investor confidence came again from the mortgage sector. Countrywide Financial Corp., the biggest U.S. mortgage lender, said it had to draw down an entire $11.5-billion bank credit line to fund its operations after it was essentially shut out of other credit markets.

Underscoring the problems companies are having raising short-term financing, the Federal Reserve said the volume of commercial paper fell sharply in the past week.

The S&P and Nasdaq are now 10 percent below their 52-week highs from mid-July. That is a threshold professional investors label a market correction, as opposed to a signal that a bull market has ended. Bear markets are defined by a 20 percent fall in prices from their highs.