Coming Week: Focus on Fundamentals

John Rekenthaler, vice president of research at Morningstar, says that the bill's passage may indicate the beginning of the end of the bear market, but he notes that a recovery historically takes twice as long as the downturn.

"I would hope if the bill passes that we're most of the way through this," he says. "But, there are more 500-point drops than 500-point rises. Panic seems to be a stronger emotion than optimism, or at least it works more quickly."

With each day seeming to bring news of a snowballing economic decline, the market will continue to price in key concerns about earnings potential in an environment where credit is limited and pricey. GE's (GE Quote) downwardly revised earnings guidance last week could be an indication of more warnings to come, says Weintraub. While such announcements will help or hurt individual stocks or sectors, he expects the broad market to be affected mainly by credit conditions.

"I think the important thing that people are watching are Libor and indications that banks are willing to lend to each other. That's the important thing," says Weintraub, referring to the London Interbank Offered Rate. "How can you expect economic data to be anything but bad?"

The government jobs report on Friday confirmed what most had guessed -- the economy continued to shed jobs at a rapid pace in September. The government's weekly report on initial jobless claims next Thursday will provide evidence of whether contractions have remained severe so far this month.

Household names, including consumer goods companies like Hanesbrands (HBI Quote) and computer-hardware company Hewlett-Packard (HPQ Quote), announced big job cuts last month.

In light of those trends, Rekenthaler predicts that investors will start to look at economic fundamentals and away from the day-to-day turbulence, especially now that the TARP deal has been sealed.

"I think attention is going to start moving more toward those [indicators] and away from what's going on in D.C.," he says.

Talk of a cut to the federal funds rate target has ramped up recently as lending costs have risen. The release of minutes on Tuesday from the Federal Reserve's most recent meeting could provide insight into how key policymakers plan to respond to the credit crunch, job losses and financial turmoil.

Brian Dolan, the chief currency strategist at Forex.com, says the Fed minutes will likely be a "nonevent" in the stock market. He believes Fed Chairman Ben Bernanke's speech on Wednesday will provide a clearer and timelier indication of whether the agency will lower rates at the end of October.

Dolan predicts that Bernanke "will signal that they're not, which will leave the markets extremely disappointed."

Weintraub notes, however, that investors have been stunned by unexpected results, from the House turning down the TARP proposal the first time around, to Wells Fargo's (WFC Quote) unexpected offer to buy Wachovia (WB Quote), knocking out a government-supported deal already in place with Citigroup (C Quote).

As a result, markets have remained volatile, with the Dow Jones Industrial Average plunging hundreds of points then reversing declines within a single trading session. Weintraub says it's nearly impossible to predict how stocks will fare on a short-term basis if unforeseen news and unexpected calamities continue to drive the market.

"Any week," says Weintraub, "it's like, 'Will Monday bring a bankruptcy or restructuring?' And is that bad or good? You don't know what Monday will bring until it's Monday."

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1 What would best describe your stance heading into the coming week of trading? Bullish Bearish Neutral 2 Which of these sectors do you think is set to move up in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities 3 Which of these sectors do you think is set to move down in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities View the results without voting