Stocks made an attempt to go higher, buoyed by a sharp drop in oil prices, after getting crushed at the open by a wave of dismal earnings.
"There’s an extremely high level of gloom and doom," Al Goldman, chief market strategist at Wachovia Securities, said on CNBC. But "last time I checked, they don’t ring a bell at the bottom -- we should be doing some selective buying," Goldman advised.
Goldman says commodities have been the market darling for nearly five years now and that dance is over and it's time to find a new partner.
"I want to stay away from most commodities such as gold and I want to buy basic Americana stocks when nobody else wants them," Goldman said.
American Express reported profit well below expectations and said it was no longer on track for expected earnings growth this quarter.
After a string of encouraging results from banks, Wachovia cut the party short, reporting an $8.86 billion second-quarter lossthat was even worse than analyst estimates, and said it was cutting its dividend for the second time this year.
However, SunTrust Bank beat expectations. The bank said it earned 78 cents a share in the second quarter, excluding one-time items, ahead of 64 cents a share the market expected.
SunTrust also said it sold 10 million shares of Coca-Cola to improve its ability to cover losses. Coke shares edged higher.
Shares of Apple came under pressure after saying following the close of trading Monday that current-quarter earnings would miss analysts' expectations.
Shares of Texas Instruments also took a hit after it missed profit forecasts due to weakness in sales of cell-phone chips.
Chemical company DuPont said earnings rose from the year-ago period, while United Parcel Service reported a fall in earnings but put up numbers that met analyst estimates.
European markets also struggled on weak tech results and fell more than 1 percent.
London's FTSE-100 lost more than 1 percent as component Vodafone tumbled more than 14 percent after lowering revenue guidance.
Handset maker Ericsson also struggled, losing more than 8 percent after indicating that costs would rise.
"The credit crunch really has impacted the wider economy … and we're seeing that with tech stocks as well," Joshua Raymond of City Index told "Worldwide Exchange."
Asian shares were mostly lower, but Tokyo bucked the trend, climbing nearly 3 percent on the back of strength in financial stocks.