That could change, however, if there were several consecutive days of selling, he said.
Oil prices rose to 2.5-year highs above $92 a barrel as Libyan production fell amid violence in the country. Investors are concerned the revolt in Libyacould spread to other major oil producers in the Middle East and North Africa, crippling supplies.
Oil companies, however, gained on soaring oil prices. More than 60 percent of all domestic and international oil producers edged higher, including Chevron and ExxonMobil .
But oil refineries—which will see higher input costs if prices remain high—suffered, including Valero Energy , Hess and Marathon Oil .
And airlines were hard hit by rising oil prices, as most major carriers sank, including Delta Air Lines, United Continental, AMR, Southwest Airlines and US Airways.
Saudi Arabia’s deputy oil minister tried to calm investors’ nerves, telling CNBC the country will not allow any supply disruptions from the Middle East to impact global supplies of oil.
But the head of the IEA said higher oil prices posed a threatto the global economic recovery, warning that if oil prices stay at $100 per barrel or above this year it would be as much of a burden as high oil prices were for the world economy in 2008.
The unrest in Egypt kept gold at lofty levels of more than $1,400 an ounce. The dollar , meanwhile, traded relatively flat against a basket of currencies.
The tech-heavy Nasdaq plunged as investors fled highly liquid technology names, including Nvida , MEMC Electronic Materials , Micron and Applied Materials , according to Dave Rovelli, managing director of equity trading at Canaccord Genuity.
Financials were also hit by investors who move quickly in-and-out of these stocks, including Citigroup , Bank of America and JPMorgan.
Bank of America shares also were hurt after news it was writing down goodwill for a credit cardunit by $20 billion, which was more than investors had expected.
Among the day's earnings news, Home Depot fell despite posting better-than-expected results. However, some analysts remained skeptical as S&P Equity lowered its rating on the firm to "sell" from "hold."
Macy's also fell despite reporting higher profits on rising holiday sales. The firm expects sales and profits will continue to rise this year.
Wal-Mart sank, after posting its seventh straight quarterly dropin U.S. sales.
And Barnes & Noble plunged more than 10 percent after the bookstore chain announced it would suspend its dividend, and didn't provide a final quarter outlook for its fiscal year because of the bankruptcy filing of rival Borders. In addition, S&P Equity cut its price target on Barnes & Noble to $19 from $21.
Hewlett Packard and Chesapeake Energy were slated to post earnings after the market closed.
On the M&A front, BHP Billiton said it plans to buy shale gas reservesfrom Chesapeake Energy for $4.75 billion.
And Forest Laboratories agreed to buy Clinical Datafor $1.2 billionto add to its portfolio of drugs to treat depression.
In other corporate news, Apple shares declined amid conflicting reports over whether or not its next version of the iPad will be delayed.
And Netflix sank after news that Amazon.comwould offer a streaming TV and movie serviceto compete directly against NetFlix. The service will be available to Amazon's premium customers.
Dynegy fell after news that billionaire investor Carl Icahn would not buy the power company, and that its chairman and CEO was stepping down.
Volume on the consolidated tape of the New York Stock Exchange was robust, with 5.6 billion shares changing hands. That was the second largest volume this year. Not including today, the average daily volume this year was 4.52 billion.
Treasurys ralliedafter the government auctioned $35 billion in 2-year Treasury notes to yield 0.745 percent. The bid-to-cover ratio was 3.0. Investors also flooded into Treasurys as stocks plunged. The 10-year Treasury rose 1 2/32 points Tuesday, to 101 11/32, as the yield fell to 3.465 percent.
On the economic front, consumer confidence rose to a three-year highin February, according to the Conference Board. The Conference Board's index of consumer sentiment rose to 70.4 this month from a revised 64.8 in January, higher than 65 that economists had expected. Also, the Case-Shiller Home Price Indexreported a 1.2 percent drop in its 10-city index, and a 2.4 percent drop in its 20-city index. The index is down for the sixth straight month.
European stocks ended loweras tensions in Libya grew, adding to a retreat the previous session. The FTSEurofirst 300 index fell 0.5 percent.
On Tap This Week:
WEDNESDAY: Mortgage applications, existing home sales, Philadelphia Fed President Plosser speaks, Kansas City Fed President Hoenig speaks, 5-year Treasury note auction; earnings before-the-bell from Lowe's and TJX; earnings after-the-bell from Limited Brands, Priceline.com, and Transocean.
THURSDAY: Durable goods orders, jobless claims, USDA agricultural trade outlook, new home sales, natural gas inventories, oil inventories, 7-year Treasury note auction, money supply; earnings before-the-bell from General Motors, Kohl's, Newmont Mining, Safeway, Sears and Target; earnings after-the-bell from AIG, First Solar, Gap and Salesforce.
FRIDAY: GDP (second reading), consumer sentiment; earnings before-the-bell from JCPenney.
More From CNBC.com:
