Market Insider/Tuesday Look Ahead

Recession fears shook the markets Tuesday and credit jitters will likely continue to trouble stocks Wednesday.

Just look at the financial stocks. Citigroup crumbled, down more than 7 percent. Everything else in the group was also down: J.P. Morgan , Bank of America , Lehman , Bear Stearns , Merrill Lynch and American Express .

Tuesday started off poorly. Futures were down amid speculation yet another European bank was having problems, but it was the ISM non-manufacturing data, released before 9 am New York time, that gave markets the big blow. A freefall in that index signaled to some market players that the service sector has slowed down somewhat abruptly.

Suddenly there was a lot more talk about recession, especially on top of the negative jobs report for January, released last Friday.

The Dow lost 370 points, or 2.8 percent, its worst day since Aug. 9. The Nasdaq lost 73 points, or 3.1 percent, while the S&P fell 44 points or 3.2 percent. For the fist time since January, 2003, all three of those indexes fell more than 3.5 percent in a two-day period. Treasurys, as you might imagine, gained. As prices rose, the yield on the 10-year slid to 3.587 percent. The yield on the two-year fell below 2 percent to 1.948 percent.

On Wednesday, markets will be weighing the outcome of the Presidential primaries in two dozen states. Productivity data and unit labor costs are reported at 8:30 am. There are also several Fed speakers worth watching, particularly Philadelphia Fed President Charles Plosser, an FOMC voting member. Plosser speaks at 1:40 p.m. on the economic outlook in Birmingham, Ala. He will take questions from the audience.

On the earnings front, Time Warner, CIGNA, Devon Energy and ITT report before the bell. Cisco will be closely watched when it reports after the bell. American Express is holding an investor day where its CEO will discuss the company's outlook, starting at 2:30 pm.

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