To compound matters, the third-quarter earnings reporting season is nearing, and investors fear profit warnings are likely to rise, Vick says.
Still, Vick says investors should not panic, arguing that while the government's plan might not jump start a bull market, it will soften downside risks.
"This type of plan is necessary to help stabilize the market and help set a bottom," Vick says.
If the plan is to succeed it must boost confidence, says Johnson.
"You need all the pieces to fall into place," he says. "The House has to pass it today. The Senate has to pass it on Wednesday. President Bush must sign it on Friday. And the government must start to implement the plan next Monday."
Major institutional investors are still waiting for details on how the government will buy the toxic mortgage assets from struggling banks. They want to know what assets will be bought, what prices the government will pay, what banks and other financial institutions will participate.
Right now, "all those things are up in the air," says Vick.
Additionally, investors worry if a U.S. bailout plan will help stem the contagion that prompted rescues of two major financial firms in Europe and led central banks, including the Federal Reserve, to pump additional cash into world markets to try to thaw a credit freeze.
Investors feared the troubles facing the banking sector might worsen the economy's outlook and constrain lending, a key pillar of business and consumer spending and vital for profits.
Concerns over Europe's banking and credit woes — including a multi-nation rescue of one of Europe's biggest banks and the bailout of a second bank in Britain — were driving down markets, said Clem Chambers, CEO of ADVFN, Europe's leading stocks and shares website.
The chilly reception in Asia "doesn't surprise me," said fund manager Marc Faber, publisher of the well-known investment newsletter The Gloom Boom & Doom Report, "because the bailout plan will not change the situation very much in the financial sector."
"Everybody is dead scared," Chambers said. "Nobody knows where it's going to stop."
"There's no silver bullet for what's plaguing the financial markets," said William Kaye, managing partner of the Great Asia Hedge Fund in Hong Kong.
Kaye believes the U.S. government should have allowed financial institutions to fail if they made irresponsible bets on subprime mortgages and other risky investments.
"Why not let them go broke?" he said. "People who do stupid things should get punished." He said the Paulson bailout reminds him of the piecemeal way Japan let a banking crisis drag on throughout the 1990s by periodically rescuing banks instead of allowing them to go out of business.
Monday's plunge in European bank stocks came amid announcements that:
• The governments of Belgium, the Netherlands and Luxembourg are pumping $16.4 billion into Fortis to keep it solvent. The Belgian-Dutch bank and insurance company is one of Europe's 20 biggest banks.
• The British government is nationalizing troubled Bradford & Bingley, a mortgage bank specializing in loans to buyers of rental property. It was the second British taxpayer bailout of a mortgage lender in a year.