Stock markets are in for a shortened but volatile week with investors still feeling disappointment over the U.S. government's latest plan to aid the financial sector.

The financial sector had driven stocks higher leading up to last week on optimism that U.S. Treasury Secretary Timothy Geithner would offer details on getting rid of banks' toxic assets as a way of unwinding the global credit crisis.

But markets sustained steep declines last week with Toronto down 3.66 per cent and the Dow industrials 5.2 per cent on what was perceived as a lack of clarity about how the plan would work to spend the second half of the US$700-billion bailout package approved last fall.

Investors also hesitated to get too excited about the upcoming announcement on preventing home foreclosures.

"I feel for Geithner, I think he was pressured to get something out there and he wasn't ready, that was clear," said Patricia Croft, chief economist RBC Global Management.

"There are a lot of big issues that haven't been addressed."

Croft said market expectations prior to the Geithner announcement last Tuesday were unrealistic when it comes to details and how quickly the aid can be administered.

"Because in terms of the Obama administration, expectations are so high, a record approval rating for the new president, all completely justified -- but everyone was hoping, I guess, that they would have a silver bullet, but they didn't."

"And I think that's what markets are grappling with now. We would all like to have that, we would like to have one announcement, get it over with and drive on."

But Croft said that isn't possible since we're in an "epic" credit cycle and in the midst of a deep deleveraging process that won't go away overnight.

"So, trillions of dollars have been thrown at this problem, we're still deep in the midst of an economic downturn and a credit and solvency crisis, so we're not there yet. There's more work to be done but to me the biggest thing is the pricing issue," said Croft.

"There has to be some clarity on the pricing of these toxic assets, to get them off banks' balance sheets, get them out of the way and drive on. But again, we're not there yet."

Judging by the tone of last week's heavy slate of earnings, investors are unlikely to find solace from quarterly corporate reports.

Research In Motion Ltd. (TSX:RIM), Air Canada (TSX:AC.B) and Manulife Financial (TSX:MFC) were just three of the big disappointments of last week.

Although expectations for the fourth quarter earnings season were fairly minimal, Croft said the results are worse than expected.

"And what's interesting to me is that companies are basically saying we have no clarity about where we go from here -- we're just trying to survive here," she observed.

"The earnings numbers are horrendous but they seem to be kind of secondary right now. Right now the focus is on the economy, on the credit crisis."

On a brighter note, Croft said she is encouraged by signs that the market is trying to gain traction.

For example, there have been fears that the TSX would re-test the recent low of 7,724 points hit in November, but the TSX is still almost 1,000 points away from that, even with last week's loss.

"The market is trying to put a bottom in here -- but recognizing that we think there are monumental challenges ahead both in terms of the credit crisis and the economic repercussions as well," she said.

North American markets are closed Monday. The TSX is shuttered as Ontario observes Family Day while New York is closed for Presidents Day.