Market Lurching To-and-Fro

Meanwhile, analysts at Deutsche Bank cut their price target on Citigroup (C Quote) to $9, which on Monday announced plans to lay off 52,000 workers.

As the financials slim down in an effort to stem damage from the credit crisis, Federal Reserve Chairman Ben Bernanke, Federal Deposit Insurance Corp. head Sheila Bair and Treasury Secretary Henry Paulson were testifying before Congress to discuss their $700 billion Troubled Asset Relief Program, which was designed to bolster liquidity for banks with stressed balance sheets.

Secretary Paulson said at the event that he does not plan to initiate new programs beyond the TARP to prop up ailing banks. He also said he does not believe that the financial-relief package will wholly fix the economic problems that have emerged as a result of the credit crunch and cautioned against using the package's funds to soothe problems outside the financial sector.

Paulson's refusal to endorse additional relief for the financial system is confusing, said Michael Pento, senior market strategist at Delta Global advisors. "Now that the Democrats are in power, it seems like the Republicans are trying to be backing away from fixing the economy. Perhaps in some insidious way they would like the economy to be weak and blame it on the Democrats -- and I'm a Republican," he said.

Setting Paulson's motivations aside, Pento said that it is reasonable for the Treasury Secretary to say that the TARP is not a panacea. He said that the government has been devaluing the dollar in an effort to keep asset prices higher. The major averages are caught in a trading range, weighed down by negative economic news but propped up by the government's monetization efforts, which act as an inflationary force. "Overall we're just going to be treading water," he said. "It's a trader's market."