By Steve Goldstein

WSJ - U.S. stock-index futures pointed to a recovery from the previous day's selloff, with a flurry of earnings releases battling banking-sector woes for investors' attention.

Less than two hours before the start of trading, Dow Jones Industrial Average futures were 91 points higher at 8036. The S&P 500 futures gained 8.7 to 814.7, and Nasdaq 100 futures rose 4.25 to 1151.75. Changes in futures do not always accurately predict early market moves after the opening bell.

Stocks dropped sharply Tuesday, with the financial sector skidding nearly 17% as investors panicked at the likelihood that banks needed more capital without an easy way to get it. The Dow Jones Industrial Average, in its worst-ever performance on Inauguration Day, skidded 332 points, the S&P 500 lost 38 points and the Nasdaq Composite dropped 88 points.

With a lack of significant U.S. economic data to look forward to, a flurry of high-profile earnings reports are in the spotlight. AMR, UAL, and United Technologies post results, and after the close, Apple and eBay report.

Some traders hoped positive sentiment would spill over from late Monday, when International Business Machines bucked the trend of high-tech competitors to post a 12% increase in fourth-quarter profit and give an upbeat outlook for 2009.

But BlackRock started off the morning by posting an 84% plunge in fourth-quarter net income; shares slid 3.3% premarket.

While earnings will attract attention, the financial sector will be back in the spotlight after the 17% dive in the sector on Tuesday. European markets fell, as bank shares took another pummeling. In Frankfurt action, Bank of America traded at $5.36 from a $5.10 close and Citigroup traded at $2.98 from a $2.80 close. Asian markets closed lower, dragged down by weakness in financials.

Investors in the U.S. will also be watching Timothy Geithner's confirmation hearing for Treasury Secretary. His top job will be to explain to Senators why the previous $700 billion fix of the financial sector didn't work and more funds are required to clean up the mess.

Continued at link ...

The dude is trying to reflate, bail out dead institutions as you seem to advocate (which I think is a mistake--why not let them fail--their assets, if they have any, could be picked up at firesales by new or currently small solvent banks--capitialize those instead), talking about creating 3 million jobs.

You can't blame Obama for years of mistakes made by others.

Excerpt from Denninger Jan. 14.

http://market-ticker.denninger.net/archives/2009/01/14.html

Fully aware of the mathematics of the matter - that if GDP growth is 3% but debt growth is 6% the law of exponents says that eventually the game of musical chairs will end in tears both The Executive and The Fed have desperately tried to blow bubble after bubble, knowing full well that when the last bubble bursts an enormous deflationary credit collapse must and will come crashing down upon the economy just as it did in 1929 and 1873, bankrupting tens of millions of Americans, throwing millions out of their homes and destroying hundreds of thousands of businesses.

THAT DAY HAS NOW ARRIVED AND INSTEAD OF ACCEPTING THEIR JUST PROPORTION OF THE DAMAGE THEY ARE CRAVENLY APPEARING IN FRONT OF CONGRESS AND DEMANDING TO BE SAVED, COMPLETE WITH THEIR LEARJETS, HOMES IN THE HAMPTONS AND YACHTS WHILE EVERYONE ELSE LITERALLY BURNS IN HELL, THREATENING ECONOMIC NUCLEAR WAR IF YOU REFUSE THEIR BIDDING - AND YOU HAVE SAID "YES" INSTEAD OF JAILING THE LOT OF THEM FOR EXTORTION!

The necessary GDP adjustment - a moderate recession - should have been taken in 1987. It was not, and instead a bubble was intentionally blown. We got the Internet Bubble.

The necessary GDP adjustment - now about 10%, or a mild depression - should have been taken in 2000. It was not, and instead an even bigger bubble was intentionally blown. We got the Housing Bubble.

The necessary GDP adjustment - now about 20%, or a moderate depression, should have been taken in the summer of 2007. Alarmed by the mathematics, Bernanke attempted to blow an even bigger bubble with the discount and interest rate cuts, plus manipulation of reserves and 23A exemptions. The money went into commodities but the bubble was very small and short-lived because the mathematical limits of debt in the system had been reached and by the summer of 2008 this became evident with the failure of Fannie, Freddie, Bear Stearns, Lehman and AIG, along with a collapse in the commodity, stock and credit markets.

We are now up to a near-30% necessary correction in GDP, a SEVERE DEPRESSION, as a direct and proximate consequence of the actions taken by you, Henry Paulson, Ben Bernanke and Alan Greenspan over the previous twenty years and, more recently, the previous eighteen months.

Fully fifty percent of the damage that HAS TO be taken was ADDED TO THE SYSTEM as a DIRECT CONSEQUENCE of your and their actions over the last year and a half!

I did inhale.

Compare and contrast:

Market Ticker

I did inhale.

for agreeing with those mistakes, whipping for those mistakes, and adding more mistakes of his own.

he and the Dems immediately owned the problem. Now it's a Democratic problem, and since the Dems are fully in control of governing, whatever happens from now on will be their responsibility, and voters will hold them accountable for it in 2010 and 2012.

The markets know this, and it looks like they've decided to begin exerting the strict discipline that they failed to exert previously. The pressure is on from day one. There's no margin for error here. The Obama folks are now on notice.