Stocks Get Slammed by Late Selloff

Stocks sold off in the final minutes of trading as uncertainty got the best of the market.

"Nobody wants to take a stake in this market — They’ve been run over too many times before," Steve Grasso of Stuart Frankel told CNBC. "You’ve got huge down days on no volume — that tells you that the big boys aren’t here yet to play," he explained. "[T]here are too many unknowns."

The Dow Jones Industrial Average tumbled 203.18, or 2.4 percent, to close at 8175.77. The S&P 500 shed 3.2 percent, while the Nasdaq lost 3 percent.

The CBOE Volatility Index, a gauge of fear in the market, was lower for most of the day, then popped above 80 just before the closing bell.

Late selling in the final minutes of trading sucked a lot of the gains out of the financial sector, with Citigroup ending at $11.73, a 12-year low.

It also lashed commodity stocks such as Schlumberger , which doubled its loss from $2 to more than $4 in a matter of minutes to close at $43.28.

Earlier, stocks got a bump as investors were encouraged by the government's latest program to infuse banks with capital.

"There are so many different programs going on, I think there's a general feeling that the Fed and the government are getting on top of things," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.

Overseas was a different story, however, amid concern that central banks may not be able to prevent a global recession.

Japanese stocks tumbled to 26-year lows and most other Asian markets fell heavily in chaotic trade, while European stocks hit a fresh 5 1/2-year low.

Most regional bank stocks advanced as at least 10 more banks joined the Treasury's $250 billion program to recapitalize the troubled sector and spur lending.

Fifth Third Bancorp shares rebounded from Friday's slump after the bank said Sunday that it has applied for a $3.4 billion cash injection from the government.

Shares of National City jumped after PNC Financial said late last week that it would buy the struggling Cleveland-based lender.

Among other notable moves in the banking sector, Regions Financial and First Horizon gained more than 10 percent.

Telecom stocks were among the day's biggest gainers, climbing 3 percent, after Verizon Communications narrowly beat estimates by posting a profit of 66 cents per share, a penny ahead of expectations.

Verizon shares jumped 10 percent, making it the best performer on the Dow.

There were only two other advancers on the Dow, 3M and Home Depot .

Health-care provider Humana said its profit slipped 39 percent, but it, too, beat estimates by posting earnings of $1.49 a share, two cents better than estimates. Its shares fell 15 percent.

Crude oil ended the day down nearly $1 a  barrel, settling at $63.22 a barrel, after falling to a fresh 17-month low earlier.

In economic news, new home sales rose 2.7 percent in September, more than expected, after falling 12.6 percent to a 17-year low in August. Still, sales were down by a third from the same time last year. The median home price fell 9.1 percent to $218,400.

Investors will be bracing for reports later in the week on durable goods, GDP and personal spending, as well as a decision by the Federal Reserve on interest rates.

"Certainly there is going to be a rate cut on Wednesday. We expect around half a percentage point," Angus Campbell, head of sales at Capital Spreads, told CNBC.

This Week:

TUESDAY: Fed begins two-day meeting; Case-Shiller home-price index; consumer confidence; Earnings from U.S. Steel
WEDNESDAY: Weekly mortgage applications; durable goods; weekly crude inventories; Fed announcement on interest rates; Earnings from Aetna, Corning, Kellogg, Kraft, P&G, Qwest, Sony and Visa
THURSDAY: Weekly jobless claims; First look at Q3 GDP; weekly natural-gas inventories; Eanrings from AstraZeneca, Colgate Palmolive, CVS/Caremark, ExxonMobil, Motorola, Royal Dutch Shell and Electronic Arts
FRIDAY: Personal income and spending; consumer sentiment; Fed's Yellen speaks; Earnings from Chevron, Clorox and Nissan

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