Futures pull back after Senate bailout plan vote

Investors may be taking a wait-and-see approach until the House votes on the plan on Friday. It was the House's defeat of the plan Monday that sent the Dow plunging 778 points. But the caution may also be due to the fact that passage of the plan wouldn't immediately erase the problems in the financial system, including credit markets that are currently stagnant.

Wednesday night, Dow Jones industrial average futures were down 85, or 0.78 percent, at 10,802. The Standard & Poor's 500 index futures were down 9.8, or 0.84 percent, at 1,158.60, and Nasdaq 100 futures were down 17.75, or 1.1 percent, at 1,561.00.

In Japan, the Nikkei index was down 0.99 percent.

Caution was also apparent in Wednesday's trading, which saw the Dow Jones industrials falling about 20 points after being down more than 200 earlier. The close was vastly different from the massive swings in the blue chips the first two sessions of the week.

Wall Street's focus has been on credit markets that seem to be barely moving, and in turn, posing a threat to economic growth.

"We've taken the credit markets for granted much like you do the electricity coming on every day but in this particular case the power grid is down," said Jim Dunigan, managing executive of investments at PNC Wealth Management. "If we don't have a functioning credit market banks aren't lending to each other--credit is dried up. That ultimately affects economic activity."

Nervousness about debt has made banks hesitant to extend loans; banks have preferred to hold onto their cash. But some analysts and policymakers are worried that drop in lending will curtail economic growth. And the fear paralyzing the credit markets is making it more difficult and expensive for some companies to fund their day-to-day operations, putting basics like payroll at risk.

Anglo-Swiss mining giant Xstrata PLC said Wednesday it was dropping a $10 billion bid for rival Lonmin PLC because of uncertainty about access to credit. And industrial products maker Actuant Corp. lowered its sales outlook because of the credit market distruption.

The London Interbank Offered Rate, or Libor, on overnight dollar loans dropped to 3.79 percent on Wednesday from Tuesday's record 6.88 percent. Libor measures how much banks are charging one another to borrow. Many consumer lending rates, including about half of all U.S. adjustable-rate mortgages, are tied to Libor.