US STOCKS-Wall St falls on energy shares, bank worries

(Updates to late morning)

* Drop of $5 in oil's price stings energy companies

* Analyst sees $5 billion write-downs at Merrill

* Bernanke says Fed may extend emergency lending

* Housing sales data shows sharp drop in May

By Ellis Mnyandu

NEW YORK, July 8 (Reuters) - U.S. stocks fell in volatile trading on Tuesday as a pullback in oil prices hit shares of energy companies and investors fretted about predictions of mounting credit losses in the financial services sector.

Investors feared that credit turmoil would hurt economic growth and profits, a concern that sent global equity markets lower and pushed the S&P 500 .SPX , the broadest major stock gauge, on course for a bear market, defined as a 20 percent decline from its high.

Among energy shares, Exxon Mobil Corp (XOM.N) was down more than 2 percent, Chevron Corp (CVX.N) fell nearly 2 percent and oil services company Schlumberger (SLB.N) declined about 4 percent.