The market will begin the peak period for quarterly earnings reports next week, as evidence grows that the economic pain is being felt across an ever-broadening range of industries.
At the same time, there's hope the government will announce a plan to cope with the banking crisis.
"We're waiting to see what's going to come out of Washington to solve the banking crisis [and eventually] to stimulate the economy," said Hugh Johnson, chairman of Johnson Illington Advisors.
Wall Street and owners of financial stocks fear that the government might seize ailing banks, getting rid of their bad assets and making a profit where possible, while wiping out their shareholders.
However, many now believe the plan from the new Obama administration will be limited to buying banks' toxic assets, the very same ones which have brought the financial system and the global economy to its knees over the past year and a half.
Expectations are that the government might create an aggregator "bad bank" that would buy all the toxic assets, mostly bad home loans and their associated financial derivatives, from troubled financial institutions.
The move would fall short of what the government did in the 1980s, when it seized ailing savings and loans banks, which wiped out their shareholders but allowed the government to make money by the time the banks were sold to new owners.