Holding Up Reasonably Well, For Now

Futures point to a lower open of about 10 points on the S&P 500 index. That is not bad considering the substantial gains on Friday, but a more sober tone may soon emerge.

The prospect of a massive stimulus package is a factor supporting current market sentiment. The economic impact won't be felt for a long time, and there is a great deal to be worked out, but some details are starting to emerge. Reports suggest that the approximate $800 billion to $1 trillion plan will include $300 billion in tax cuts as well as 600,000 new government employees. A little something for everyone.

The focus could soon shift. Fourth quarter earnings reports start a week from today with Alcoa (AA). The numbers are generally expected to be lousy, and there are few companies that will be willing to offer anything other than an extremely cautious outlook for 2009. Whether the market is priced for bad news remains to be seen, but it is likely that the tone turns cautious during the early period of the reports so that the severity of the bad news can be assessed.

The only economic report today is the generally ignored construction spending report at 10:00 ET. This is the November report, and a decline of 1.2%, matching the October decline, is expected.

Oil is down $0.57 to $45.77 a barrel. The millennium(s)-old conflict in the Middle East rages on amid extensive coverage, while the continuing Ukraine gas dispute is probably being underestimated in terms of long-term geopolitical risks.

Meanwhile, The Wall Street Journal article this morning on "smart money" buying into the failed IndyMac Bank shows that properly-placed vultures may well find some excellent pickings in 2009 amid the rubble from 2008.