US STOCKS-Wall St sinks as oil hits car sales, profits

(Update to early afternoon)

* Higher oil prices stir profit worries

* Big manufacturers, techs, financials lead declines

* Dow on the cusp of bear market

* Ford slides on June sales slump; GM also lower

By Deborah Jian Lee

NEW YORK, July 1 (Reuters) - U.S. stocks fell on Tuesday, putting the Dow on the cusp of a bear market, as high oil prices dragged down U.S. car sales while tough credit conditions threatened the financial sector.

Shares of automakers slid following reports of a June sales slide, with Ford Motor Co (F.N) down almost 7 percent.

Declines were widespread, but shares of financial services companies, big manufacturers, miners and technology companies took most of the beating as concerns about the economy grew.

Shares of aluminum producer Alcoa Inc (AA.N) fell more than 5 percent, and was the Dow's top drag, while software maker Microsoft Corp (MSFT.O), down more than 3 percent, weighed on the S&P 500.

Among financial shares, shares of Bank of America Corp (BAC.N), the No. 2 U.S. bank, fell more than 4 percent, while shares of JPMorgan Chase & Co (JPM.N), the No. 3 U.S. bank, declined almost 4 percent. Shares of Citigroup (C.N), the No. 1 U.S. bank, were down nearly 2 percent.

"Oil is a problem," said Chip Hanlon, president of Delta Global Advisors, Inc. in Huntington Beach, California. He said a report showing a modest improvement in manufacturing "is not strong enough to mitigate everybody's fear."

An unexpected rise in the Institute for Supply Management's manufacturing index for June helped to temper some of the worries, but gains were short-lived.

"I would not trust any rally from here. A lot of people are calling for a rally to start soon. I personally wouldn't trust any bounce that started from here," Hanlon said.

The Dow Jones industrial average .DJI fell 149.24 points, or 1.31 percent, to 11,200.77. The Standard & Poor's 500 Index .SPX declined 16.14 points, or 1.26 percent, to 1,263.86. The Nasdaq Composite Index .IXIC slid 29.91 points, or 1.30 percent, to 2,263.07.

The Dow could officially enter a bear market if it closes down 20 percent below its record finish set last October.