All eyes will be on Wall Street today, with financial players and investors fearing a colossal sell-off when the markets open following yesterday’s global meltdown.

Stock indices around the world plunged yesterday on pessimism over America’s ability to claw its way out of a recession, with markets from Berlin to Bombay posting large losses.

Some were predicting the Dow Jones Industrial Average could fall by as much as 800 points this morning, and while Wall Street was closed yesterday in honor of Martin Luther King Jr.’s birthday, the Dow Jones futures index fell 546 points, or 4.5%. If the futures market is correct, it would translate into the fourth-largest point loss ever for the Dow.

The expected market drop today in the Dow comes after Friday’s poor performance, when the index fell 0.5% to 12,099.30, bringing losses so far in 2008 to nearly 9%. The lackluster performance was partly in response to President Bush’s announcement Friday of a $150 billion stimulus package meant to shore up the economy.

“We are in total panic mode,” the director of government affairs at the Reason Foundation, Michael Flynn, said. “The markets can handle anything but uncertainty, and what the Federal Reserve and the White House have offered so far has done nothing to reassure people.”

Also this morning, bond insurer Ambac Financial Group, which was downgraded to double-A by Fitch Ratings on Friday, is scheduled to release its fourth-quarter earnings, which could further rile the markets. Wachovia and Bank of America are also scheduled to report earnings today.

Historically, markets drop 25.5% during a recession, and since its peak of 14,164.53 on October 9, the Dow has dropped 14.6%. “So we are halfway done, based on historic data, but there is more to come,” the chief investment officer at money manager Scout Investment Advisors, William Greiner, said.

As for the reasons for the nosedive in the European and Asian markets yesterday, “The U.S. markets were closed, so people wanting to move money out of equities and liquidate positions attacked the foreign markets,” Mr. Greiner said. “People are basically saying, ‘Get me out of equities,’ and since they couldn’t sell U.S. stocks today, they took it out on the foreign markets.”

Among the biggest losers yesterday were Japan’s benchmark Nikkei 225 index, which slid 3.9% to its lowest close in more than two years, and India’s Sensex index, which fell 7.4% for its second-biggest plunge ever. Hong Kong’s blue-chip Hang Seng index plunged 5.5%, its biggest percentage drop since the September 11 terrorist attacks, while Britain’s benchmark index, the FTSE-100, slumped 5.5% and Germany’s DAX 30 plunged 7.2%.

President Bush’s proposal, which includes rebate checks of $800 to individuals and $1,600 for families, as well as tax incentives for businesses, apparently failed to reassure investors. Among the criticisms: Americans who receive the rebate checks will use the cash to pay down debt rather than spend it on new acquisitions; the $150 billion stimulus is too small to have a real impact on the $14 trillion American economy; and that by the time any benefits kick in, the economy will already be recovering and the additional boost could create inflation.

“This is a demand-side stimulus package, which failed in 2001 and I don’t think will work now,” a professor of economics and finance in the School of Management at the University of Michigan, Mark Perry, said.

Even among those that believe the temporary help from a stimulus package will be beneficial, there is growing anxiety that the political wrangling associated with passing it in Congress will be its downfall.

“There is a lot of concern as to whether the administration and congress will agree in time over the details of the package,” the chief economist at Wachovia, John Silvia, said. “The package will probably do something to help the economy in the short run, but whether it gets done in time is really the issue.”

The Federal Reserve is also trying to do its part to improve the economy, but that too is being met with skepticism from investors. The Federal Open Market Committee is widely expected to cut its key interest rate by half of a percentage point when it meets next week. It already lowered its key rate three times last year, with the last on Dec. 11, when it sliced the rate to 4.25%, the lowest level in two years.

“Mr. Bernanke’s rate cut will be a yawn, because it’s what the markets expect,” Mr. Flynn said of Federal Reserve Chairman Ben Bernanke. While investors say Mr. Bernanke should be more aggressive in cutting rates, economists are increasingly voicing concern that the cuts are inflationary.

It may be that despite the rate cuts and the fiscal stimulus package, little can be done to stem the market’s slide.

“When an economy has overspent itself and over levered itself, a pull back is inevitable and there is nothing that Bernanke or Bush or anybody on Capitol Hill can do about it,” a professor of finance at the College of Business Administration at Northeastern University, Harlan Platt, said.