Wall Street tumbles as earnings season kicks off

By Leah Schnurr

NEW YORK (Reuters) - Stocks slid on Tuesday, hammered by fears that companies will show they struggled in the first quarter as the recession dragged on as the earnings season kicked off with Alcoa.

After the worst fourth-quarter earnings season on record, investors were expecting another round of poor profits, starting with aluminum producer Alcoa Inc after the closing bell.

Alcoa reported a second consecutive quarterly loss on falling demand and sharply lower prices. Its shares slipped 1.4 percent to $7.68 in extended trade, after initially rising following the results. Alcoa had closed down 1.5 percent in regular trade ahead of the results.

Earnings for S&P 500 companies are expected to fall by 36.9 percent, according to Thomson Reuters data. Analysts said they would be watching for comments from companies on outlooks for the rest of the year to see if the recent rally is sustainable.

"The key is going be what companies say about the future," said Craig Hester, chief executive of Hester Capital Management in Austin, Texas. "I don't think it's going to be any surprise to people that the first-quarter earnings are going to be lousy."

The Dow Jones industrial average fell 186.29 points, or 2.34 percent, to 7,789.56. The Standard & Poor's 500 Index lost 19.93 points, or 2.39 percent, to 815.55. The Nasdaq Composite Index gave up 45.10 points, or 2.81 percent, at 1,561.61.

It was the second day of declines after stocks rallied off 12-year lows in the last month. Despite the declines, the S&P 500 is up more than 20 percent since hitting a bear market closing low in early March, on hopes the economic slump is moderating and banks are stabilizing.

Oil prices fell nearly $2 a barrel to below $50 a barrel as the market eyed another rise in crude inventories, taking energy stocks lower.