Will Things Calm Down Today?

Stock index futures are pointing to a higher opening, but will it hold?

LONDON (Reuters) - World stocks were at near three-year lows on Tuesday but fears of a major market meltdown failed to carry through from Wall Street to Europe as confidence in bank rescue packages persisted.

The U.S. Congress's rejection of a bank rescue plan tore nearly 9 percent off the broad S&P 500 on Monday but European shares and many Asian stock markets clawed back from early losses on hopes the U.S. plan would eventually go through.
U.S. stock index futures also pointed to a higher opening, suggesting belief that Monday's selloff was over-done.

"It's certainly my working assumption that there (will be) some sort of agreement reached in the U.S. and based on that I would expect the market to recover quite strongly from yesterday's sell-off," said Darren Winder, equity strategist at Cazenove.

The president just made a public address urging passage of new legislation and explaining why it's needed to get the economy back on track. He also warned of the pain to come if no package is completed. One point the president made was the loss yesterday cost Americans $1.3 trillion, more than the $700 billion cost of the bailout. Of course, the loss yesterday was for the most part on paper. The bailout represents real money.

I'm sure a new bill will be created, but it won't come quickly. If the markets calm down the urgency will be further reduced.