President Obama is set to sign the historic $800 billion stimulus package and U.S. automakers are ready to explain how they plan to become viable businesses, yet equities are perilously close to November's bear-market lows. The market is supposed to be forward looking, so what did investors fail to see in the past few days that has brought us to these gut-churning levels?

As Americans slept through the last few hours of a three-day holiday weekend, overseas news pushed Tuesday's domestic headlines off the market's agenda. Japan, the world's second largest economy, said gross domestic product contracted by an annualized rate of nearly 13% in the last three months of the year.

"The GDP data from Japan was breathtaking," says Carl Steidtmann, chief economist at Deloitte Research. "And the finance minister didn't exactly cover himself with glory showing up apparently drunk at the G7 meeting and then having to resign."

That in itself should be bad enough news. But then it got worse: Moody's Investors Services said it may downgrade major Western banks with exposure to the crumbling economies of Eastern Europe. "That potentially puts a whole new asset class in the toilet," says Robert Brusca, chief economist of Fact and Opinion Economics.

Whatever the market was discounting, it sure wasn't this double whammy out of Japan and Europe. "When you've got nothing but bad news it's very hard to find reasons to buy," says Steidtmann, noting that Monday's flight to quality -- in the U.S. dollar, gold and Treasurys -- shows renewed fear on the part of international investors.

We were worried that something like this might happen - that once the market stopped being transfixed by the journey of the stimulus bill through Congress, it would return to trading off increasingly dismal fundamentals.

After all, it has been a thoroughly crummy earnings season. As of Friday, 385 of the companies in the S&P 500 reported quarterly results. The upshot? Fourth-quarter earnings are set to decline more than 40%, the worst showing since Thomson Reuters started tracking the data in 1998. Indeed, the S&P 500 is poised to post its first quarterly net loss ever. As Brusca asks: "Why should the markets do anything else?"

Technical support on the S&P 500 stands at about 750. It held up there not only back in November but back in 1992. Whether the third time is a charm remains to be seen.