Stocks fall for 6th session on recession fear

NEW YORK (Reuters) -Stocks fell for a sixth straight session on Wednesday, as a coordinated worldwide cut in interest rates failed to alleviate fears about a global recession.

For the Dow and the S&P 500, Wednesday capped their biggest six-day point loss ever. It was a session of wild swings, with no clear direction determined until the final minutes. Wall Street's favorite measure of investor fear, the Chicago Board Options Exchange Volatility Index, hit a record intraday high and closed at yet another record.

In the last hour of trading, U.S. Treasury Secretary Henry Paulson warned that the turmoil "will not end quickly." He also said it may be several weeks before the Treasury Department begins buying unwanted and illiquid assets from financial firms under the $700 billion bailout program that Congress approved last week and that is now U.S. law.

In Wednesday's session, Alcoa shares fell 12 percent and weighed on the Dow a day after the aluminum company reported lower-than-expected quarterly profit as demand softened in its key sectors.

Bank of America's shares fell 7 percent to $22.10 after it was forced to price a $10 billion stock offering at below Tuesday's closing price.

"It shows lack of confidence in the effect of the rate cut this morning. People all day were trying to digest how effective it would be and at the end of the day, they decided it would be safer to sell," said Giri Cherukuri, head trader at OakBrook Investments LLC, in Lisle, Illinois.

Cherukuri noted there may also have been some nervousness ahead of the lifting of the ban on short sales in more than 950 stocks.

"We don't know how we are going to open up tomorrow once the shorts are allowed to get back into those stocks," he said.

The Dow Jones industrial average fell 189.01 points, or 2.00 percent, to 9,258.10, while the Standard & Poor's 500 Index dropped 11.29 points, or 1.13 percent, to 984.94. The Nasdaq Composite Index slipped 14.55 points, or 0.83 percent, to 1,740.33.

FASTEN YOUR SEAT BELT

During the session, the Dow swung 433.29 points from its session low at 9,194.78 to its intraday peak at 9,628.07 in extremely volatile trading. The Nasdaq's arc from its session low at 1,706.86 to the day's high covered 100.03 points, while the S&P 500 ran 50.09 points from its session low at 970.97 to intraday high above 1,000 in a day of whiplash moves.

With Wednesday's decline, the blue-chip Dow Jones industrial average has lost 14.7 percent in the last six days -- its worst such run since after the September 11 attacks in 2001. In terms of points, the Dow has dropped 1,594.55 points over the last six days -- its worst six-day streak ever. For the S&P 500, it was the worst six-day percentage loss since the 1987 crash -- and its worst six-day point loss ever.

The Nasdaq has lost 16.81 percent in the last six days -- its worst six-day percentage loss since April 2001.The Nasdaq has dropped 351.55 points in the last six days -- its worst six-day point loss since December 2000.

IBM GAINS AFTER THE BELL

But investors got some positive news after the closing bell. Tech bellwether IBM reported preliminary third- quarter earnings that beat analysts' expectations and affirmed its full-year profit outlook, driving its stock up about 4 percent to $94.00 in extended-hours trading. That marked a reversal from the regular session, when IBM fell 5.3 percent to close at $90.55 before the earnings news.

During the regular session, Treasury Secretary Henry Paulson urged intensified global cooperation to stabilize financial markets and said countries must be careful not to harm one another while they guard their own interests. Paulson recited the numerous measures that members of the G7 and others have taken to try to halt plunging stock prices and rebuild confidence, but said more was needed.

An S&P index of financial shares fell 3 percent.

Alcoa Inc shares fell 12 percent, or $2.00, to $14.71 after reporting disappointing earnings. The Dow component also said it was halting major capital projects in the face of uncertain markets.

Materials companies' shares rose, however, as higher gold prices buoyed miners. Freeport-McMoRan Copper & Gold Inc shot up 10.1 percent to $42.60.

Monsanto Co shares rose 9.8 percent to $81.44 after the company posted a smaller quarterly loss as strong herbicide and seed sales helped offset seasonal slowness and research and development costs.

RATE CUTS GO GLOBAL

Central banks around the world cut interest rates on Wednesday in their first broadly coordinated policy action in history, as fears of a deep recession banished recent worries over inflation.

In an attempt to stem the worst global financial crisis since the 1930s, the U.S. Federal Reserve, European Central Bank, Bank of England, Switzerland, Canada and Sweden all lowered official rates by a half-percentage point.

Over the past 12 months, more than $12.4 trillion of global stock market wealth has been wiped out, according to the market capitalization loss on MSCI's main world equity index. More than a third of that loss -- about $4.6 trillion -- has occurred in just the past three weeks since credit market turmoil deepened following the bankruptcy of U.S. investment bank Lehman Brothers.

Trading was active on the New York Stock Exchange, with about 2.13 billion shares changing hands, above last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 3.53 billion shares traded, also above last year's daily average of 2.17 billion.

Declining stocks outnumbered advancing ones by roughly 3 to 1 on both the NYSE and the Nasdaq.

(Editing by Jan Paschal)

(Reporting by Kristina Cooke)