updated 7/13/2008 1:11:02 PM ET 2008-07-13T17:11:02

Investors can't seem to catch a break — Wall Street again starts a week with oil prices at their highest levels yet, and banks poised to reveal that they remain on shaky footing.

Major Market Indices

None of the troubles that have rocked the market over the past year have let up yet: not the housing market, not high commodities costs, not the ailing financial system.

"We've got a fistful of drivers that are working against the market," said Arthur Hogan, chief market analyst at Jefferies & Co. "And they're all important."

It's a different collection of worries than the ones that hurled stocks lower at the beginning of the decade, after the technology bubble burst and the Sept. 11, 2001, terrorist attacks sent the country reeling. But many on Wall Street are worried that the effects of the country's current problems could end up being just as devastating, or more so, for stocks.

The Dow Jones industrial average dropped below 11,000 for the first time in nearly two years before settling at 11,100.54 Friday. The blue-chip index ended the week down 1.67 percent; the Standard & Poor's 500 index fell 0.28 percent; and the Nasdaq composite index fell 1.85 percent.

The three indexes are firmly entrenched in bear market territory, down more than 20 percent from their peaks last fall. The average bear market ultimately leads to a drop of about 30 percent, Hogan said.

Because stocks have tumbled so sharply recently, it's possible that bargain buyers might re-enter the market this week. And if this earnings season follows the same pattern as the first-quarter earnings season, second-quarter results that are not quite as bad as the pessimists are anticipating could lead to some brief relief rallies.

"We're preparing for a worst-case scenario for the financials, for Freddie Mac and Fannie Mae, for the market in general. If we don't get that, we may celebrate a bit," Hogan said. However, "it's a market that struggling to find anything that's positive to rally on."

On Friday, oil prices soared to a new trading record above $147 a barrel, following the two-day pullback back of nearly $10 a barrel Monday and Tuesday. After that massive reversal, Wall Street is likely to take any pullback in oil this week with a grain of salt. The effect on oil and other commmodities prices on consumers and businesses will be seen in the Labor Department's Consumer Price Index and Producer Price Index this week.

Investors will also parse the National Association of Home Builders' July survey of housing market conditions on Wednesday, and the Commerce Department's June report on new home construction.

Meanwhile, Wells Fargo & Co. on Wednesday and JPMorgan Chase & Co. on Thursday are expected to report profit declines. Citigroup Inc. — the nation's largest bank by assets — is expected to post its third straight quarterly loss.

Wall Street will also be waiting to see whether the government will take action to rescue Fannie Mae and Freddie Mac. Shares of the two troubled mortgage giants plummeted by 45.4 percent and 46.6 percent respectively last week.

Until the housing market starts seeing signs of recovery, it is going to be difficult for the financial sector to see significant improvement in consumer credit conditions, the tight credit markets, or the value of its mortgage-backed securities.

"Without question, everyone's terrified. I really couldn't understand why there would be a rumor about a run on Lehman Brothers," said Thomas J. Lee, equities analyst at JPMorgan, noting that the Federal Reserve has said investment banks can borrow from the central bank's discount window.

Lehman Brothers Holdings Inc., like Fannie and Freddie, saw its shares plummet last week.

"It sounds like people living in fear and terror," Lee said. "But as I put myself in the shoes of a portfolio manager, I can't imagine them wanting to ride the stock down to zero."

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