Chrysler Corp.'s second-quarter earnings, hurt by slow sales and expensive rebate programs, fell $161 million, a 47 percent drop from the $341 million it earned in the same period last year, the company said yesterday.

The decline, to a profit of $180 million, translates to 86 cents a share, compared with $1.46 per Chrysler common share in the year-ago period. Revenue fell to $8.8 billion from $9.9 billion.

Chrysler's second-quarter decline is in line with those of its traditional domestic rivals, General Motors Corp. and Ford Motor Co. Ford's profit fell 45 percent in the quarter and GM's dropped 40 percent.

But Chrysler, which is smaller than GM and Ford and has a relatively limited product offering, is seen as the most vulnerable of the big domestic car companies. As such, it has been the subject of numerous rumors involving possible mergers with foreign automakers, especially with Italy's giant Fiat SpA.

Chrysler officials yesterday confirmed that their company has been holding talks with Fiat but declined to comment on the nature of the discussions. However, Harvey E. Heinbach, an auto industry analyst with Merrill Lynch, Pierce, Fenner & Smith Inc. in New York, rejected speculation that Chrysler's financial report pushes the firm closer to a deal with Fiat.

"There is no surprise, no shock," in Chrysler's second-quarter numbers, Heinbach said of the second-quarter results. "This is pretty much in line with our expectations. We expect Chrysler to show a third-quarter loss, too."

Wall Street seemed unsurprised as well. Chrysler stock finished unchanged at $15.12 1/2 on the New York Stock Exchange yesterday.

Chrysler officials are talking with Fiat, "but no one knows what those talks are about, and they could involve a whole gamut of possibilities," Heinbach said. Conceivably, Chrysler could agree to enter a joint venture with Fiat to produce minivans in Europe, according to some industry analysts. Others said Fiat might take a minority stake in Chrysler to help support the American company's $15 billion program to revamp its product lines. In that case, according to sources, Chrysler would still provide Fiat with vehicles for overseas sales.

Fiat is shopping for deals. The Italian company announced yesterday it will participate in a $5 billion joint venture with Ford to produce tractors and other farm equipment for global sales. The two companies will form a new operation incorporating FiatGeotech, a Fiat subsidiary, and Ford's farm implements group, Ford New Holland.

But at Chrysler's headquarters in Highland Park, Mich., yesterday, the focus was on the U.S. market, where American automakers have been spending hundreds of millions of dollars to encourage car and truck sales.

Those rebates and sales-incentive programs upset what could have been a winning quarter for Chrysler, said Chairman Lee A. Iacocca. "If not for the huge year-to-year increase in per-unit incentive costs, we would have made more money this quarter than we did in the second quarter of 1989," Iacocca said.

However, even with incentives, Chrysler sold 110,000 fewer vehicles in the second quarter of 1990 than it did in the year-ago period, largely because it stopped producing subcompact Omni and Horizon cars this year without having a replacement ready.