Oil, GM Wallop Stocks

Meanwhile, video rental chain Blockbuster(BBI Quote) said it was no longer planning to buy flagging electronics retailer Circuit City (CC Quote). The proposed deal had been worth more than $1 billion. Blockbuster's stock surged 5.8% to $2.65.

Meanwhile, UnitedHealth (UNH Quote) cut its 2008 earnings estimates, citing increased Medicare costs and declines in commercial business. The company also paid $912 million to settle two class-action lawsuits against it over stock-options backdating. The stock dropped 2% to $25.12.

As for commodities, crude oil closed up $2.60 to a record close at $143.57. Gold rose $2 to $946.50.

The government said that crude inventories declined by 2 million barrels last week, ahead of analysts' forecast of a drop of 1.2 million barrels.

Despite crude's gains, energy stocks sold off. The Energy Select SPDR (XLE Quote), which tracks the sector, lost 2.9% to $86.30.

The mining group was also mainly trading lower. Nucor (NUE Quote) lost 14% to $61.94, and U.S. Steel (X Quote) stumbled 13% to $153.40.

Coal took a hit in the afternoon, falling below $200 a ton from $225 a ton. Arch Coal (ACI Quote) fell 17% to $62.21, and Peabody Energy (BTU Quote) lost 9.3% to $77.90.

Chesapeake Energy (CHK Quote) was one of the energy sector's bright spots, adding 3% to $69.40 after reaching an agreement with Plains Exploration & Production (PXP Quote) to develop a natural gas property. Plains Exploration finished the day down 6% to $68.87.

In economic data, the ADP nonfarm payroll numbers showed that the U.S. lost 79,000 jobs in June, a much bigger decline than economists' prediction of 20,000. The estimated change in employment for May was revised down to an increase of 25,000 jobs from 40,000. On Thursday, the Labor Department will issue its monthly report, a data set that often moves the market.