Market slips on profit and economic worry

NEW YORK (Reuters) - Stocks fell on Tuesday, hurt by a pullback in commodity shares on fears the global economy is spiraling into recession and after a rash of companies released disappointing earnings and outlooks.

Energy companies, including Exxon Mobil Corp, as well as miners, weighed on the broader market. By mid-afternoon, though, all three major U.S. stock indexes had cut losses, with the Dow briefly turning positive in choppy trading.

A sharp drop in Freeport-McMoRan Copper & Gold's

profit as well as a broad slide in commodity prices sparked selling in commodity-related shares, a day after their advance helped propel the market to a sharply higher finish.

Adding to the jittery mood, tech bellwether Texas Instruments Inc warned of slowing sales for its widely used analog chips, while chemical company DuPont Co cut its full-year forecast.

But diversified manufacturer 3M Co shares climbed 6.6 percent to $61.32, lending support to the Dow, after the company posted a stronger-than-expected quarterly profit.

"It's a foregone conclusion that the economy is slowing and that companies are going to be issuing downbeat forecasts," said Richard Sparks, senior equities analyst at Schaeffer's Investment Research in Cincinnati, Ohio.

"Also, commodities was a heavily invested area when oil was reaching new highs so we are seeing some unwinding of those positions still."

The Dow Jones industrial average fell 49.38 points, or 0.53 percent, to 9,216.05, while the Standard & Poor's 500 Index dropped 7.85 points, or 0.80 percent, to 977.55. The Nasdaq Composite Index was down 34.15 points, or 1.93 percent, at 1,735.88.

Caterpillar Inc, a maker of excavators and bulldozers, also missed profit expectations, sending its stock down 3.6 percent to $39.44.

Freeport, the world's largest publicly traded copper producer, said quarterly profit fell by a third and would curtail planned mine expansions because of weaker metals prices and current economic conditions.

Shares of Freeport-McMoRan dropped 5.8 percent to $34.59, while the American Stock Exchange's Gold BUGS index slid 5.7 percent. U.S. front-month crude declined $3.36, or 4.5 percent, to settle at $70.89 a barrel.

Texas Instruments shed 5.7 percent to $16.95 on the NYSE, while shares of Dow component DuPont slid 6 percent to $33.99.

The gloomy corporate news underscored the severity of the fallout from the U.S. housing slump and the impact of the prolonged global credit crisis.

Even though there were further signs of a thawing of credit markets on Tuesday, investors feared the logjam has probably done damage to U.S. and world economic prospects.

On Nasdaq, shares of Apple Inc were a top drag, down 4.4 percent at $94.09. The maker of the iPod and the iPhone is due to post quarterly results after the market's close on Tuesday.

(Editing by Jan Paschal)