The Dow Jones Industrial Average is down 0.35 percent, the S&P 500 Index has fallen 0.27 percent, and the Nasdaq Composite Index slipped by 0.17 percent at 10:54 a.m. in New York as investors wait for answers from Washington.

Boeing led the Dow earlier in the session with a gain of 4.45 percent as it shattered earnings expectations. Although Caterpillar also beat expectations for earnings, its revenues missed expectations and its shares plunged 5.96 percent.

Treasury Secretary Geithner testified at 10:00 am this morning about his involvement in the AIG bailout. Critics have charged that AIG inappropriately used taxpayer money to pay off certain banks it had contracts with instead of letting them take losses.

In his prepared remarks, Geithner defended his motives by saying that he acted in the interest of the American people. If AIG failed, he said, it would have been “catastrophic for our economy and for the American families and businesses.”

According to various publications such as the Washington Post and New York Times¸ Geithner may be losing his influence on economic policies to Paul Volcker, the chairman of Obama’s Economic Recovery Advisory Board. Geithner favors moderate reforms for banks while Volcker advocates tougher restraints.

Investors will see how much Geithner is criticized during the testimony to judge the extent of his waning influence. Also of importance is how the AIG bailout will be judged; if sentiments are harsh, it may signal that Wall Street will face more regulations from Washington.

The Federal Reserve’s money policy committee is scheduled to end its two day meeting today and will release its statement at 2:15 pm. While it is widely expected its key interest rate will be unchanged, investors will attempt to learn from the statement the timing of Fed’s attempt to withdraw liquidity. The statement may also have implications for Fed Chairman Bernanke’s confirmation vote tomorrow.

Lastly, but perhaps most importantly, President Barack Obama will deliver his State of the Union Address at 9 pm EST. Key issues for Obama include unemployment, the federal budget deficit, and bank regulations.

Unemployment has been stuck at 10 percent since last October. Obama has pledged his commitment to help the middle class by helping to get the economy back on track and create more job opportunities.

The federal deficit was $1.4 trillion in 2009 and projected to be $1.35 trillion in 2010, according to the Congressional Budget Office. Obama attempted to address this issue with several recent proposals. His bank tax may generate $90 billion over the next 10 years. His other plans may also curb spending by $250 billion over the next 10 years.

While some critics say his efforts are too minimal to put a meaningful dent in the deficit, others complain that the economic recovery is too fragile for such contractionary measures. Critics also wonder how Obama plans to trim the deficit while still trying to pass his healthcare bill.

Wall Street will also listen carefully for any statements pertaining to bank regulations. Obama has already proposed a bank tax. He recently proposed the ‘Volcker Rule,’ which would limit principal trading activities for banks. According to a preliminary report yesterday, the rule could force Goldman Sachs and Morgan Stanley shed business units worth billions of dollars.