NEW YORK ( TheStreet -- The markets will continue to focus on events in Japan on Wednesday. To put it in perspective, following the Kobe earthquake, the Nikkei dropped 25% and the market managed to recover its losses by the end of the year. This time around, however, there's just an earthquake to deal with but also a tsunami and nuclear plant destruction.

There had been some optimism around the European debt meetings, but those rosy feelings seem to have dissipated. The sticking point is that the Irish has refused to budge on raising its corporate tax rate. Hewlett Packard ( HPQ), Bank of America ( BAC)and Microsoft ( MSFT) have all come out against the tax and threatened to do business elsewhere.

This is exactly what Ireland is fighting against. It doesn't want to punish the companies that can help the country out of its financial mess. There are rumblings that Irish banks will need more capital. Inflation figures for Europe come out on Wednesday.

In Washington, lawmakers are trying to postpone implementation of the Durbin amendment's debit cap limitations. The Senate wants a two-year delay and the House is advocating pushing implementation back a year. The legislation could be introduced on Wednesday.

It will be a busy morning for economic reports at 8:30 a.m. EST with housing starts, building permits and producer prices all due at once. The Federal Reserve has quit talking about core inflation and now talks about "longer-term" price developments. John Ryding of RDQ Economics points out that the Fed has begun to recognize some inflation, but he still doesn't believe the central bank will raise rates until 2013.

The market continues to wait to see if Nasdaq OMX ( NDAQ) can pull together enough money to make a competing bid for the NYSE Euronext ( NYX). The news could come sometime this week.

In corporate events, rail company CSX ( CSX) is slated to hold an analyst meeting, while Guess? ( GES) reports its quarterly results.

Shares of Pacific Sunwear ( PSUN) were weak in after-hours trading after the specialty retailer reported a slightly wider than expected quarterly loss and gave a disappointing outlook.

-- Written by Debra Borchardt in New York.

>To contact the writer of this article, click here: Debra Borchardt.

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