Market Insider/Tuesday Look Ahead

The global freefall in equities markets is likely to shake Wall Street Tuesday morning as investors shun stocks and search for safety plays.

It's times like this when even the most bullish wrap themselves in bear fur and look for investments that might be able to claw back from lows hit in panicky selling. Earnings from Bank of America , Ambac and Wachovia come before the bell and could be factors in early trading. Johnson and Johnson also reports, and tech wunderkind Apple reports after the bell, a possible bright spot.

Treasury Secretary Hank Paulson speaks at 8 a.m. at the Chamber of Commerce in Washington. His topic is the economy, markets and housing and his words will be carefully watched by traders globally for any signs of reassurance from the U.S.

While the U.S. markets were closed Monday, more than a few traders reported to work to trade the electronics markets and prepare for the carnage that is likely to follow big losses in Asian and particularly European stock markets Monday.

The London FTSE lost 5.5 percent, its biggest one day loss since Sept. 11, 2001 and the German Dax was off 7.2 percent. The FTSE is now off 10 percent in five days. Emerging markets were also crushed, with India, for example, losing 7.4 percent.

Once more the financial sector is at the heart of the pain. Fears about European banks and even worries that the Bank of China may have subprime writedowns pounded already troubled markets. The real worry though is that the U.S. is entering a recession, or has entered one, and the economic impact will slam the rest of the world.

"I would look for a very, very big flight-to-safety," said CNBC's Rick Santelli. Santelli says some things worrying the markets right now are concerns about a global slowdown and the lack of confidence in Washington's efforts to construct a viable stimulus package. He also said the possibility of more bank writedowns globally and, the debt downgrade of mortgage insurer Ambac late last week are also scaring investors.

The U.S. markets had one of their worst weeks in years last week, with the Dow losing 4 percent to 12,099, just above the psychological 12,000 mark. That drop put the Dow 15 percent below its October highs and five percent above bear market territory. The S&P was down 5.4 percent and is 15 percent from its highs. The Nasdaq is now 18 percent from its October peak, losing 4.1 percent last week.

"This is the final chapter being written," said Santelli. "But that doesn't mean what we have left will be pretty."

Expect more noise from Washington Tuesday on the shape of the stimulus package. President Bush meets with members of Congress to discuss it.

Questions? Comments?