Late Selloff Slams Stocks

Virtually every market sector finished with losses. The Philadelphia Semiconductor Sector Index fell 2.3%, the KBW Banks Index gave back 2%, the Dow Jones Transportation Average lost 1.3%, and the Nasdaq Biotech Index slipped 1.2%.

Roughly 4.01 billion shares changed hands on the New York Stock Exchange, as decliners edged out advancers by a 6-to-5 margin. Volume on the Nasdaq reached 2.36 billion shares, with losers outpacing winners 9 to 7.

Another of the factors pushing buyers out was a spike in oil prices. The September crude contract surged $1.38 to $78.21 a barrel, a record closing price.

"When we crossed through the $78-a-barrel threshold, the market came under pressure, much like it did in the past," said Mendelsohn. "The fact that the market turned negative isn't catastrophic, but it makes me nervous."

The market erased all of its gains from Monday, when bargain-hunters emerged after a big selloff last week. The Dow rose 92.84 points to 13,358.31 last time out, and the S&P 500 added 14.96 points at 1473.91. The Nasdaq advanced 21.04 points to 2583.28.

Despite topping the 14,000 level for the first time during the month, the Dow ultimately fell 1.5% for July. The S&P 500 lost 3.2%, and the Nasdaq ended down 2.2% for the month.

The market's inital momentum in the new session came amid positive earnings. Before the open, General Motors (GM Quote - Cramer on GM - Stock Picks) posted second-quarter earnings that easily exceeded analysts' estimates. Revenue was also better than expected. After rising early in the session, the automaker's stock dipped 21 cents, or 0.6%, to close at $32.40.

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