By Leah Schnurr
NEW YORK (Reuters) - Stocks mostly fell, reversing early gains in another choppy session on Thursday as investors worried that recent moves to thaw frozen credit markets might not be enough to avoid a global recession.
In early afternoon, the Dow industrials and the S&P 500 were lower, while the Nasdaq recovered from an earlier loss to rise modestly in volatile trading. Volume was light to moderate, with many market participants absent for the observance of the Jewish holiday Yom Kippur.
Financials fell, with Wednesday's coordinated rate cut by global central banks, including the Federal Reserve, failing to spark optimism as credit markets remained mostly clogged.
The S&P financial index dropped 3.4 percent. Morgan Stanley plunged by as much as 25 percent on Thursday on concern about the status of a planned $9 billion investment by Japan's top bank, Mitsubishi UFJ Financial Group Inc. But the bank shot down speculation about the deal and some traders blamed the steep drop on short-sellers after the end of a temporary ban on such trading.
The energy sector was the top drag on the Dow as the price of oil fell.
"We've got a disappointment that everything that's been done to date and everything that's being contemplated has not had any significant impact ... to reduce the credit freeze-up and it now looks like it's spread worldwide," said Bucky Hellwig, senior vice president at Morgan Asset Management, in Birmingham, Alabama.
"You've got investors concerned that the global slowdown that had been feared may be materializing, courtesy of the frozen credit markets."
The Dow Jones industrial average was down 43.17points, or 0.47 percent, at 9,214.93 and the Standard & Poor's 500 Index was off 11.12 points, or 1.13 percent, at 973.82. But the Nasdaq Composite Index was up 9.72 points, or 0.56 percent, at 1,750.05.
In early afternoon trading, Morgan Stanley's stock was down 14.2 percent at $14.41.
Shares of General Motors tumbled 17.2 percent to $5.72, the day after the car maker reported European sales declined through the first nine months.
On the upside, tech bellwether IBM gained 1.9 percent to $92.27 the day after it reported solid quarterly profit. Hopes of revitalized tech spending had initially propelled stocks higher, but by midday, the Dow and S&P 500 were eyeing their seventh down day in a row.
In another sign that consumer finances are stretched, Micron Technology Inc said it will cut its global workforce by 15 percent due to falling demand and oversupply of NAND flash memory products used in everything from digital cameras to mobile phones.
The news lifted shares of Micron IM Flash Technologies joint venture partner Intel Corp, which rose 3.9 percent to $16.87 on Nasdaq.
(Editing by Jan Paschal)
