While still wildly volatile, the stock market may be ready to start paying attention to what normally drives it - earnings and economic news.
Traders have shifted their focus slightly from a deep obsession with the credit crises and the many plans to fix it to its impact on the real economy and corporate profits.
An important read on the economy comes at 12:15 p.m. Wednesday when Fed Chairman Ben Bernanke speaks on the economy to the Economic Club of New York.
Wednesday is also a busy day for earnings, with major banks J.P. Morgan and Wells Fargo and Dow component Coca-Cola reporting before the open. Coke will be closely watched. Its stock slumped more than 7.4 percent Tuesday, after rival Pepsico disappointed with an earnings miss and and lowered forecast.
Tech took a big hit Tuesday. The S&P technology sector was the worst performer, losing nearly 4 percent on concerns the weakening economy would take its toll on tech names. After the bell, Intel reported quarterly profits of $2 billion or $0.35 per share, slightly beating analysts estimates. eBay reports after the bell Wednesday.
The market swung in a more than 700 hundred point range Tuesday before closing moderately lower. "You're going to see probably one of the most mixed bag earnings seasons you'll ever see. That's kind of a wishy washy comment, but if the economy's bad, the earnings are going to be bad," said Peter Costa of Eckhart.
The Dow fell 76 points or 0.82 percent to 9310.99. The S&P 500 was down 5 at 998, and Nasdaq was off 65, or 3.54 percent to 1779.
"We really haven't been seeing a lot of order flow today. Everybody's cautiously tip toeing around this market at the moment. I don't think anyone's willing to be caught on the wrong side of anything," said Costa. "We had the huge move yesterday. It followed through this morning, and it fell right on its face."
There's some important data that the market might just focus on ahead of the open. Retail sales for September, a read on the consumer's willingness to spend, is reported at 8:30 a.m. The producer price index is also reported at 8:30 as is the Empire State survey. Business inventories are released at 10 a.m.
The Fed releases its beige book on the economy at 2 p.m.
While credit markets showed some signs of life after the U.S. announced sweeping plans to break the credit crunch by injecting funds into banks, there are still some disturbing signals. CNBC's Rick Santelli points to the Freddie Mac three- and six-month bill auction as an example.
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Yields for the three-month and six-month were 1.95 percent and 2.70 percent, respectively, well above the yields Tuesday at Treasury's auction of three- and six-month T-bills at 0.5 percent and 1.10 percent.
"That in a nutshell is living proof that there's not nearly enough thaw. Yields on Freddie bills and T-bills should be converging. They should both come in to meet each other. The fact that they're not shows that banks are still hoarding cash," said Santelli.
Santelli says it has yet to be seen whether countries, new owners of their domestic banks' equities, will lend to each other any more freely than their banks did. "The next area of contention will be that these countries will be much more reticent to ship and recycle dollars back into the U.S. to support our current account deficits, " said Santelli.
The yield on the 10-year crossed 4 percent, finishing at 4.023 percent, its highest level since August 6. The two-year was yielding 1.772 percent.
One part of the credit markets that remains hobbled is the municipal bond market. Few issues have come to market in the last four weeks, and the market itself is literally lacking buyers.
California Tuesday was carrying out a much anticipated $4 billion note offering and reported a good reception. On the first day, California officials reported selling about 37 percent of the notes up for sale this week. The yields ranged between 3.75 percent and 4 percent for one block maturing May 20, and 4.25 percent and 4.5 percent for a block maturing June 22.
"This is the biggest deal in the market in the last month," said Peter Delahunt, senior vice president, national sales manager at Raymond James.
Delahunt explained that some of the biggest muni buyers - insurance companies and hedge funds - have moved to the sidelines.
In the case of hedge funds, they remain sellers. "They've been the 700 pound gorillas of the demand universe. When they were buying they were heavily leveraged, and they were buying a lot ... now they hit the supply side" he said.
"With controlled liquidation and institutional demand on the side lines, we're in trickle down mode," he said of the muni market.
Oil fell $2.56 per barrel, or 3.2 percent to $78.63 per barrel. "I think you have the marginal buyers from yesterday selling and everyone's looking for builds in supply in Thursday's inventory report. Nothing's really changed. I think there's very little speculative activity in the oil pit," said Mike Fitzpatrick of M.F. Global.
Gold fell $2.60 per troy ounce, or 0.3 percent to $836.30.
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