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Don't expect Wall Street's turmoil to ebb in the year's last full week of trading as investors face questions about an auto bailout, the banking crisis, and the Federal Reserve's final rate-setting meeting of 2008.

The market, still hovering at decade lows, has yet to show any sign of a traditional year-end rally. And the next few days it will face a number of tests that could determine if investors are able to get past all the negative economic news to end the year on a bright note.

The fate of Detroit's three biggest automakers continues to be in question this week after the Senate failed to pass a $14 billion bailout for the Chrysler LLC and General Motors Corp. Ford Motor Co. has said in the past that it does not need government money to survive.

The White House this week is expected to unveil ways to provide emergency aid to the automakers, which have said they could run out of cash within weeks without government help. Many expect that the Bush administration will use money from the $700 billion financial bailout fund to provide loans to the carmakers.

"If the administration had some notion that this was a house of cards, that this was going to bring the entire economy down, then they have the authority to write checks out of the already passed bailout program," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

On Sunday evening, major stock indexes were modestly higher in futures trading. Dow Jones industrial average futures rose 49 points, or 0.56 percent, to 8,738. Standard & Poor's 500 index futures added 5.00, or 0.56 percent, to 891.00; while Nasdaq-100 futures rose 7.25, or 0.60 percent, to 1,220.75.

That might add to Wall Street's resilient performance on Friday after it rebounded from an early sell-off to end higher after the government said it would assist troubled U.S. automakers. The Dow rose 0.75 percent, and ended the week with a loss of just 0.07 percent.

The S&P 500 rose 0.42 percent last week, while the Nasdaq advanced 2.08 percent. For the year, the Dow is down 34.9 percent, the S&P 500 is down 40.1 percent and the Nasdaq is off 41.9 percent.

"The market's been pretty resilient," said Matt King, chief investment officer of Bell Investment Advisors. "The bad news keeps coming out ... but the market's been holding firm and making some good gains. So to us that's a good sign."

Along with uncertainty about the auto sector, the Fed's policy meeting on Monday and Tuesday will also remain in focus. The central bank is expected to lower its benchmark fed funds rate by a half-percentage point to 0.5 percent.

But, with rates so low, that means the Fed will soon run out of room to lower interest rates further to stimulate the economy.

Goldman Sachs Group Inc. and Morgan Stanley, the two biggest U.S. investment banks, will report results this week.

Analysts expect Goldman on Tuesday will report its first loss since becoming a public company in 1999. Morgan Stanley is also expected to report a loss during the fourth quarter.

Investors will also pore over economic reports, including Tuesday's release of the government's Consumer Price Index for November and housing starts.

Detroit automakers hoping for a government lifeline got it Friday night when Speaker of the House Nancy Pelosi said she would support a $15 billion loan from a fund already approved by Congress aimed at retooling factories to make fuel-efficient vehicles over the next several years.

Pelosi had been against the measure, bolstered by environmental advocacy groups. Opponents were concerned that automakers would use the money for normal operations and not deliver on requirements to develop vehicles that are at least 25% more fuel-efficient than the ones they market today.

But with job losses mounting in the U.S., many members of Congress are feeling pressure not to let the automakers go bankrupt even though most of their constituents do not favor a bailout for Detroit.

CASCADING BANKRUPTCIES POSSIBLE
Estimates are that if one automaker went into insolvency, it would cause a cascade of bankruptcies in the auto sector that could cost up to 3 million jobs. The U.S. lost more than 500,000 jobs in November alone.

The funds that would be tapped for the car companies were appropriated in the 2007 energy bill, and were meant to be disbursed by the Energy Dept. over time as each automaker qualified for the loans. "We will not permit any funds to be borrowed from the advanced technology program unless there is a guarantee that those funds will be replenished in a matter of weeks," said Pelosi (D-Calif.). How that would be accomplished is still under debate.

It was clear on Friday, after two days of hearings in front of the Senate Banking Committee and House Financial Committee, that Congress did not have the votes to appropriate new funding for a Detroit bailout, especially during a lame-duck session.

ENCOUNTERING "BAILOUT FATIGUE"
Over the last month, Congress, the public, and the media have been highly critical of the way the Treasury Dept. has overseen payouts to commercial and investment banks from the $700 billion Wall Street bailout package Congress passed in October. Representative Barney Frank (D-Mass.), chairman of the House Financial Services committee, said the public has "bailout fatigue."

Despite the intent of the package, which was to loosen lending to businesses and consumers, the credit markets remain tight. Banks have used the money for other functions, such as dividend payments, salaries, and even, in some cases, executive bonuses.

The automakers came to Washington asking for $34 billion, on top of the $25 billion loan package that was part of the energy bill. General Motors (GM) said it needed $4 billion by the end of the year to avert a financial meltdown, and Chrysler requested $7 billion, saying it would be at the minimum cash levels it needs to survive by the New Year. Chrysler on Friday retained a law-firm that specializes in Chapter 11 bankruptcy.

VOTE LIKELY THIS WEEK
Ford (F), in a better cash position, said it could likely weather the recession in 2009 without loans, though it asked for a $9 billion line of credit as an emergency fund. Executives with knowledge of the negotiations on Friday said Ford would probably not tap the loan money Congress is likely to approve next week.

Originally, Congress said it would meet Monday to vote on a bill if one came together. The vote will now take place later in the week, assuming the language of the bill is worked out to Pelosi's liking.

Chairman of the Senate Banking Committee Christopher Dodd (D-Conn.) has maintained that the Bush White House and Treasury have had the power to release funds from the $700 billion Wall Street fund. That assertion was backed up by the Federal Comptroller last week during hearings. But the White House has argued that the bill cant be interpreted to help automakers.

LONG-TERM RESTRUCTURING REQUIRED
Congressional Republicans have also signaled for a month that the only money they would vote to the automakers would be from the energy bill fund already appropriated.

The bill that Congress is expected to vote on next week is meant to give Congress time to work out a longer-term restructuring of the U.S. auto industry with the Obama Administration that will likely result in as much as $100 billion in loans being appropriated.

That money would come from either new legislation, or a combination of funding sources including the Wall Street bailout fund, $350 billion of which Obama's White House will administer. An auto industry "trustee" is likely to be appointed to regulate the payout of the money and how it is spent.

GREATER OVERSIGHT OF AUTOMAKERS
But all that help won't come without sacrifice. Company management will have to agree to tight oversight. They also will be forced to drop any opposition they have mounted in recent years to tighter fuel economy and emissions regulations. The United Auto Workers will likely have to make greater wage and benefit concessions for workers and retirees. And bond holders will likely be compelled to either write down as much as two-thirds of their investments or swap the debt for equity in the car companies.

Several Capitol Hill staffers on Friday said they also believed the government would probably try and facilitate a consolidation of GM and Chrysler, which had been talking about a merger two months ago before their financial conditions so drastically worsened.