US STOCKS-Wall St sinks on growing recession worry

(Updates to midafternoon)

By Jennifer Coogan

NEW YORK Jan 4 (Reuters) - U.S. stocks dropped sharply on Friday as recession worries mounted after data showing weak job growth in December and rising unemployment.

The Dow industrials and S&P 500 fell more than 1 percent each, while the Nasdaq was on track for a sixth straight day of declines after a downgrade of chip maker Intel Corp (INTC.O).

Declines were broad-based, but technology shares were the top drag on the three major indexes. Investors fear businesses will be less likely to upgrade equipment and software in the face of an economic slowdown.

Consumer-related shares were also deep in the red after the jobs and unemployment figures.

"The trend we see in the unemployment rate moving up from its trough is disturbing," said Bucky Hellwig, senior vice president at Morgan Asset Management in Birmingham, Alabama. "If consumers start reining in their spending -- and that's the fear of everybody -- that will increase the probability of recession."

The Dow Jones industrial average .DJI was down 194.36 points, or 1.49 percent, at 12,862.36. The Standard & Poor's 500 Index .SPX was down 26.30 points, or 1.82 percent, at 1,420.86. The Nasdaq Composite Index .IXIC was down 73.35 points, or 2.82 percent, at 2,529.33.

Shares of Intel fell 8.6 percent at $22.57 on concerns over slowing demand for semiconductors from PC makers. (Editing by Kenneth Barry)