Stocks head into Wednesday tentatively, as investors once more look to Washington for clarity on the Obama Administration's budget and policies.
Traders are also watching a market teetering on 12-year lows to see if stocks can hold onto current levels. "It's bumbling around. It doesn't know what to do," said Art Cashin, UBS director of floor operations. "It's always nervous when the government figures are on TV."
The Dow finished 37 points lower at 6726, and the S&P 500 slipped 4.49 to 696.33, its lowest close since October, 1996. "This is a kind of weak reflex rally on an oversold condition," said Cashin. Stocks had been higher Tuesday before closing lower.
"It'll be interesting to see if they go after the S and P. They're at 1995 support levels - 680 to 685. To me, that will be very important because after that you could start hitting air pockets to levels you'd rather not think about," he said.
Treasury Secretary Timothy Geithner Wednesday heads to Capitol Hill for a second day to discuss President Obama's budget, this time before the Senate Finance Committee at 10 a.m. The Senate Budget Committee continues its hearing with testimony from Peter Orszag, director of the Office of Management and Budget. Geithner testified at the House Ways and Means Committee Tuesday while Fed Chairman Ben Bernanke testified before the Senate Budget Committee.
Treasury also unveils details of the Obama Administration's foreclosure relief plan Wednesday and will clarify guidelines for homeowners on who qualifies for the program. On the data front, ADP's employment report is released at 8:15 a.m. Economists expect the ADP number to show a loss of 630,000. ISM non-manufacturing data is reported at 10 a.m., and the Fed's Beige Book on the economy is released at 2 p.m.
Another hearing worth watching Wednesday is the Senate Governmental Affairs Committee on tax haven banks and U.S. tax compliance. Representatives from IRS, UBS, the Justice Department and the Swiss Group Managing Board will discuss tax havens and the disclosure of U.S. clients with Swiss bank accounts.
Earnings reports are expected from Toll Brothers, Costco and B.J.'s Wholesale.
Did He Say Buy?
Comments from President Obama on the stock market got traders chattering Tuesday morning, but by mid afternoon the White House press office back pedaled on the comment. Here's what the president said:
"What you're now seeing is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you've got a long-term perspective on it," said President Obama.