The Wall St. street sign is photographed in front of the American flag hanging on the New York Stock Exchange prior to a NYC Central Labor Council rally for worker protections, Thursday, Sept. 25, 2008 in New York. (AP Photo/Mary Altaffer)
NEW YORK - U.S. stocks headed for a partial rebound Tuesday, a day after logging their steepest losses in years when the House voted down a proposed $700 billion rescue plan for the financial sector.
A snapback of some degree wasn't unexpected as carnage on Wall Street often attracts bargain hunters. Still, questions remain about how investors will proceed without a bailout plan in place to absorb soured mortgage and other debt from banks' balance sheets and restore confidence in lending.
Wall Street was largely surprised that lawmakers didn't support the plan, though some critics say it wasn't necessary and wouldn't do enough to resuscitate the credit markets.
While U.S. political leaders have vowed to revisit the issue, the House isn't slated to meet again until Thursday. President Bush planned to make a statement on the bailout plan at 8:45 a.m. EDT.
In the meantime, investors likely will proceed cautiously. On Tuesday, economic readings could help shape sentiment. A reading of the Chicago Purchasing Managers' index, which measures business conditions across Illinois, Michigan and Indiana, is due shortly after the opening bell, as are figures on consumer confidence.
But it's likely Wall Street will remain focused on Capitol Hill and the prospects for resurrecting the government's bailout effort, which was backed by leaders of both parties.
Advocates for the rescue plan say it is necessary to jump-start moribund credit markets, which are where businesses turn to finance their day-to-day operations. But fears of bad debt have made banks and other financial houses nervous about lending.
It has become more expensive and difficult to borrow for businesses and consumer alike, a headwind for the economy.
Dow Jones industrial average futures rose 195, or 1.86 percent, to 10,669 after falling more than 777 points, or 1.85 percent, Monday. It was the blue chips' largest point drop and 17th largest percentage drop.
Standard & Poor's 500 index futures rose 29.80, or 2.66 percent, to 1,148.60, and Nasdaq 100 index futures rose 24.75, or 1.64 percent, to 1,536.75.
Credit markets remain tight but showed signs of easing. The yield on the 3-month Treasury bill rose to 0.62 percent from 0.14 percent late Monday. The yield fell Monday as investors clamored for the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.63 percent from 3.58 percent late Monday. The dollar was mixed against other major currencies, while gold prices rose.
The "sell" orders that swept across Wall Street on Monday spread to parts of Asia. Japan's Nikkei stock average fell 4.12 percent. But Hong Kong's Hang Seng index rose 0.76. In afternoon trading, Britain's FTSE 100 rose 0.03 percent, Germany's DAX index fell 0.69 percent, and France's CAC-40 rose 0.53 percent.