NEW YORK (Reuters) - US stocks could face a further pounding this week as evidence mounts that the economy has entered a recession and problems in the financial sector accelerate.

The economic agenda is relatively light until Friday, when the Consumer Price Index will command attention, especially with oil's jump last week to a record more than $106 a barrel and the surge in other commodity prices.

But anxiety about inflation will take a back seat to the recession fears rippling from Wall Street to Main Street after Friday's government report showed employers cut payrolls for a second straight month.

At the same time, the financial sector has been pummelled by news showing further signs of troubles related to the sub-prime mortgage market.

For one, concern about the survival of Thornburg Mortgage Incincreased on Friday after the mortgage lender said it has $610 million of margin calls outstanding as of March 6, an amount exceeding its available liquidity.

The negative news trend is showing few signs of letting up, and could mean more losses for stocks.

"The sentiment right now is extremely bad," said John Praveen, chief investment strategist at Prudential International Investments Advisers LLC in Newark, New Jersey.

"On the economy side, today's numbers on the labour market probably confirm the US is in a recession," Praveen said Friday, though he added that much uncertainty still exists on the subject.

"On the credit side, we're seeing further stress on mortgage tightening and fallout from that," he added.

The S&P 500 is now off about 17 percent from its record closing high set back in October, a drop that puts the benchmark index close to crossing the threshold that market technicians consider to be the onset of a bear market.

On Friday, the Dow Jones industrial average fell 146.70 points, or 1.22 percent, to end at 11,893.69. The Standard & Poor's 500 Index slid 10.97 points, or 0.84 percent, to 1,293.37. The Nasdaq Composite Index dropped 8.01 points, or 0.36 percent, to 2,212.49.

For the week, the Dow lost three percent, the S&P 500 shed 2.8 percent and the Nasdaq declined 2.6 percent.

If there is to be any reprieve for the stock market, it could come from signs the Federal Reserve is contemplating an emergency interest-rate cut, analysts said.

The Federal Reserve is scheduled to meet on March 18.

But last week, stocks sank below levels seen on January 22, when the Fed instituted an emergency rate cut to ease credit market strains and revive the economy.

Just minutes before the release of Friday's jobs report, the Federal Reserve announced measures to address heightened liquidity pressures in term funding markets, a move the Fed's staff said was a reaction to recognition that market deterioration had accelerated recently.

"Stocks and bonds are both begging the Fed to cut at least 50 basis points, and perhaps as early as next week. Investor risk aversion is spreading and the Fed can see this in the price action of all asset classes," said Tom Sowanick, chief investment officer of Clearbrook Financial in Princeton, New Jersey.

This week's earnings schedule is short, but some quarterly results are expected from retailers, including American Eagle Outfitters.

Many analysts have said earnings estimates are overly optimistic and need to come down, further adding to worries for stock investors, who continue to see stocks as a bargain.

As the result of an eroding earnings outlook, stocks are slightly more pricey now than they were at their previous lows on January 22, with a 12-month forward price-to-earnings ratio at 13.03 now versus 12.93 then.

"It's likely that first-quarter earnings are going to be troubling for a large number of companies," said Sasha Kostadinov, portfolio manager and research analyst at Shaker Investments in Cleveland, Ohio. "The market has some valuation support here, but the near-term fundamentals are a bit sketchy."

Another source of concern for investors is oil, which has repeatedly hit record highs.

Yet another worry is the dollar, which is testing record lows against the euro and multiyear lows against the yen.