Stocks opened higher Wednesday following news that the U.S. may extend TARP funds to insurers.
The Treasury is expected to announce within the next several days the inclusion of life insurersthat are bank-holding companies or own a thrift in the Troubled Asset Relief Program, the Wall Street Journal reported on its website.
Technology bolted out in front of the pack. Shares of bankrupt flash memory chip maker Spansion more than doubled following news that the company will receive $70 million from Samsung to settle patent lawsuits.
After the worst fourth-quarter earnings season on record, the first-quarter season kicked off with a thud Monday as aluminum maker Alcoa just missed its earnings expectations.
Earnings for the S&P 500 companies are expected to fall by nearly 37 percent, according to Thomson Reuters data.
Next up is Chevron , which delivers its preliminary report after the bell Thursday. Next week, it's Johnson & Johnson , Intel , JPMorgan , Citigroup and General Electric .
Banks shares were mixed, with Citigroupgaining more than 2 percent. Bank of America and JPMorgan, however, fell.
The morning kicked off with a big merger in the housing industry, with Pulte Homes saying it would buy Texas-based builder Centex for $1.3 billion in stock. The deal would create the nation's largest home builder.
Centex shares surged though less than the 32.6 percent premium that the $10.50 per share offer represents over the company's Tuesday closing price.
More positive news came for the industry with a 4.7 percent increase in mortgage applications. Previous gains in home loan applications have mostly come from refinancing to capitalize on dropping rates, but the bulk of last week's gains stemmed from new purchases, despite a slight uptick in mortgage rates.
In earnings news, Family Dollar shares gained more than 4 percent after the discount retailer met analyst expectations with earnings of 60 cents per share.
Asian and European stock indexes were broadly lower as concerns over corporate earnings spread around the globe.
“We are going to start seeing in the next few weeks the true horror of the credit crunch … (it’s) coming home to roost in the form of horrible and horrendous numbers,” Jack Bouroudjian, chairman of Capital Market Technologies, told CNBC.
Nouriel Roubini, a professor at New York University's Stern School of Business who is known for his bearish views, said he expected the dire economic conditions to continue. Roubini also thinks that the bear market in stocks is not over yet.
Adding to the grim predictions, Dallas Fed President Richard Fisher said the US economy remains in trouble and the Fed is "duty bound to apply every tool" it has to fix the problems.
In corporate news, Brian Moynihan could be next in line to headBank of America after the current chief executive Kenneth Lewis leaves, according to the Wall Street Journal. Lewis indicated he would leave after the crisis had subsided or within three years.
Meanwhile, numerous applications from banks and insurance companies for the Troubled Asset Relief Program are set to be approved by the Treasury, sources closed to the situation told CNBC.
And the Term Asset-Backed Securities Loan Facility was tapped for only $1.7 billion in loans during its second round, suggesting that managers remained cautious of using the TALF.
Constellation Brands also is due to report numbers ahead of the bell.