Monday's healthy gains were quickly erased after Moody's derailed the banking sector. Both big and small financial institutions were hit hard, while investors also turned their attention to United Parcel Service (UPS), which handed out weak quarterly revenue. Both the Dow and Nasdaq suffered triple-digit drops, while the S&P 500 backpedaled 19 points.

GOLD LOWER FOR SECOND DAY ON BANK BLUNDER

Crude prices shook off demand worries, ending the session higher. September-dated crude added 12 cents, or 0.1%, to settle at $82.06 per barrel.

It was another day in the red for gold prices, weighed down by weak earnings and bank stocks. December-dated gold fell $10.10, or 0.5%, to settle at $1,959.90 an ounce.

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