Rally Runs Out of Gas

"We're still trying to sort out what makes the most sense, and investors remain nervous about inflation numbers," he said. "A lot of this news, though, will be overshadowed by any news about this subprime problem."

The situation would likely be substantially worse, according to Paul Mendelsohn, chief investment officer at Windham Financial, without the interventions by monetary authorities.

"It looks like $400 billion has been put into banks worldwide," he said. "That's a lot of money. It's hard to imagine what this market would be like without these injections. It would be an ugly picture."

On the New York Stock Exchange 4.58 billion shares changed hands, as advancers matched decliners. Volume on the Nasdaq reached 2.70 billion shares, with losers topping winners by an 8-to-7 margin.

Goldman Sachs (GS Quote - Cramer on GS - Stock Picks) became the latest company to take a hit from the rocky markets, saying it has seen a "disappointing performance" at its quantitative funds of late.

For instance, Global Equity Opportunities, an equity long/short quant fund, has "suffered significantly" during the surge in volatility. Much like the major averages, shares of Goldman relinquished early gains and finished with losses. The stock was down $3, or 1.7%, at $177.50.

Elsewhere, Accredited Home Lenders (LEND Quote - Cramer on LEND - Stock Picks) sank nearly 35% after the investment fund Lone Star pulled its $400 million offer for the company. Accredited said it would sue Lone Star for trying to back out of the deal. The stock ended down $3.09 at $5.82.

As for the economy, the Commerce Department said retail sales rose 0.3% last month, compared with a revised 0.7% decline in June. Excluding autos, retail sales were up 0.4%. Both figures were slightly above forecasts.

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