Recession fears slam Wall Street

NEW YORK (Reuters) - Stocks tumbled for a second day on Wednesday as disappointing profits and outlooks from a raft of major U.S. companies compounded fears of a global recession.

Worry about the impact of a deep global economic slowdown on demand for commodities sent energy and materials companies plummeting. Exxon Mobil was the top drag on the Dow, down over 7 percent.

Boeing Co's shares fell almost 8 percent after the aircraft maker reported a steep drop in quarterly profit and warned it might need to provide financing to some of its customers for planes delivered in 2009.

AT&T shares fell 6.8 percent after the top U.S. phone carrier posted a quarterly profit below Wall Street's forecasts as it grappled with pressure on wireless margins.

A plunge in emerging market assets and widespread deleveraging were seen as further signs that the credit crisis that has plagued the United States and Europe has begun to hit developing countries.

"The themes remain the same: concerns about global recession, deflation and concerns about significantly reduced worldwide demand," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.

The Dow Jones industrial average fell 478.69 points, or 5.30 percent, to 8,554.97. The Standard & Poor's 500 Index lost 56.67 points, or 5.93 percent, to 898.38. The Nasdaq Composite Index slid 80.75 points, or 4.76 percent, at 1,615.93.

As the sell-off accelerated in late afternoon trading, all 30 of the Dow industrials fell. Even McDonald's, which had earlier managed a slight gain, was down 0.5 percent at $54.88.

Boeing shares fell 6.8 percent to $43.21, where AT&T, another Dow component, slid 6.4 percent to $24.07.

Merck & Co, another Dow component, fell 4.4 percent to $28.64 after it said it would slash 12 percent of its workforce and tempered its long-range earnings outlook.

Wachovia Corp, which is being bought by Wells Fargo & Co, posted a third-quarter loss of $23.9 billion, a record quarterly loss for a banking company during the credit crisis.

Shares of Wachovia dropped 3.9 percent to $5.85, while Wells Fargo shares lost 4.8 percent to $31.08.

Shares of Exxon Mobil Corp shed 7.2 percent to $66.29. Rival ConocoPhillips, which slashed its 2008 exploration and production outlook, fell 10.6 percent to $48.25.

The S&P energy index sank 9.7 percent.

U.S. front-month crude lost $5.43 to settle at $66.75 a barrel.

SanDisk plunged 33.6 percent to $9.80 after Samsung Electronics ditched its $5.9 billion unsolicited bid for flash memory maker, citing SanDisk's deepening losses and uncertain outlook.

But Apple Inc bucked the trend, gaining 4.3 percent to $95.40, a day after the iPod maker reported a stronger-than-expected quarterly profit.

Argentina's government proposed to seize almost $30 billion of private pension funds, while Hungary hiked interest rates to defend its currency.

Interbank borrowing costs fell again, but recession worries held sway as investors fretted about the extent to which the credit crisis has damaged the global economy.

(Reporting by Kristina Cooke; Editing by Jan Paschal)