NEW YORK (Reuters) - Wall Street analysts have cut back their first-quarter earnings forecasts for U.S. companies and now project a decline, compared with previous expectations of flat growth, according to Reuters Estimates.

Earnings for Standard & Poor's 500 companies are now expected to fall by 2.7 percent from a year earlier. Two weeks ago, analysts on average were expecting a 0.4 percent rise.

Analysts again lowered their earnings growth expectations for the second quarter to 0.2 percent from a previous forecast of 1.1 percent.

The worsening global credit crunch has had a significant impact on the outlook for major U.S. companies, particularly financial businesses.

Those companies are expected to show a 25 percent earnings decline for the first quarter, which would make their sector the worst performer for the period, according to the survey of analysts.

On Sunday JPMorgan Chase & Co said it would buy stricken rival Bear Stearns for just $2 a share in an all-stock deal that values the U.S. investment bank at the centre of the credit crisis at about $236 million.

The preannouncement activity for all publicly traded U.S. companies has been negative for March, according to the Reuters survey.

"These companies have reported 102 positive forward-looking guidance statements and 156 negative outlooks, yielding a positive to negative preannouncement ratio of 0.65," said Ashwani Kaul, market analyst at Reuters Estimates.

(Reporting by Yinka Adegoke; Editing by Lisa Von Ahn)