New York  - US stocks lost ground for a second day as oil prices fell and analysts on Tuesday suggested a rally that lasted through much of March was unsustainable in the current economy.

The selloff came as the first quarterly earnings reports for 2009 were due to be announced.

Company profits were expected to drop about 37 per cent, according to a survey of Wall Street analysts by the Bloomberg financial news agency. It would be the seventh straight quarter of falling earnings.

Aluminium giant Alcoa Inc reported a first-quarter loss of 497 million dollars late Tuesday, after posting a profit of 303 million dollars in the same quarter of 2008. The report marked Alcoa's second-straight quarterly loss.

Crude oil prices dropped 3.7 per cent to 49.15 dollars per barrel in New York, driving down shares of Exxon Mobil Corp and ConocoPhillips Inc.

US stocks have rallied nearly 20 per cent since reaching 12-year lows in early March, as investors took some better-than-expected industry figures as a sign that the US economy may have hit bottom. But some investors are now suggesting the buy-up has been premature.

"It's a bear-market rally because we have not yet turned the economy around," billionaire George Soros told Bloomberg Television.

The United States is in the midst of one of its longest recessions since the Great Depression.

The blue-chip Dow Jones Industrial Average lost 186.29 points, or 2.34 per cent, to 7,789.56. The broader Standard & Poor's 500 Index was down 19.93 points, or 2.39 per cent, to 815.55. The technology- heavy Nasdaq Composite Index tumbled 45.1 points, or 2.81 per cent, to 1,561.61.

The US currency rose against the euro to 75.37 euro cents from 74.52 euro cents on Monday. The dollar dropped against the Japanese currency to 100.47 yen from 101.04 yen. dpa