NEW YORK — Wall Street extended its 2008 plunge yesterday, sending the Dow Jones industrials down 306 points and to their lowest level since last March after a regional Federal Reserve report showed a sharp and unexpected decline in manufacturing activity. Downgrades of key bond insurance companies added to the market's black mood, with investors fearing an escalation of months of credit market problems.

The Dow lost nearly 2.5 percent, giving the index its worst three-day percentage decline since October 2002. The S&P 500, the index closely watched by market pros, fell nearly 3 percent. The Dow, S&P 500 and the Nasdaq composite index have now given back all of the gains they achieved in 2007.