More negative news, but no real big reaction from the markets.  It is almost like traders are willing 2009 to stay positive regardless of the bad news pilling up.  Orders to factories fell for a record fourth straight month in November, and analysts believe manufacturing will continue to suffer in coming months as the country slogs through a recession entering its second year.

The Commerce Department said Tuesday that orders declined by 4.6 percent in November, nearly double the 2.5 percent drop economists expected. Orders have been falling since August, including a 6 percent plunge in October, the biggest setback in eight years.

The weakness in November reflected a big drop in demand for commercial aircraft. Weakness also was seen in autos, primary metals such as steel, and defense communications equipment.

Separately, the Institute for Supply Management reported Tuesday that a closely watched gauge of activity in the services sector rose slightly in December but still remained at recessionary levels. The services sector index rose to 40.6 from 36.3 in November. Any reading below 50 signals contraction.

The factory orders report showed that demand for durable goods, items expected to last three or more years, fell by 1.5 percent in November, even worse than the government’s initial estimate two weeks ago that durable goods had fallen 1 percent.

Demand for nondurable goods, items such as food, paper and petroleum products, dropped by 7.4 percent in November following a 3.8 percent decline in October. The declines for nondurable goods reflect falling demand and a big drop in prices, particularly for energy products.

The declines in November were led by a 37.7 percent plunge in demand for commercial aircraft, an extremely volatile series. Boeing Co. has been seeking to resume normal operations following the interruptions caused by a strike last year.

Demand for autos slipped by 0.1 percent following an even larger 4.1 percent fall in October as automakers continue to struggle with the economic downturn.

The Bush administration last month announced that it would lend $17.4 billion to General Motors Corp. and Chrysler LLC from the government’s $700 billion rescue fund in an effort to buy them time to reorganize and avoid having to file for bankruptcy.

Excluding transportation, orders would have posted a 4.2 percent decline in November. Demand for primary metals such as steel fell by 2.7 percent, while orders for defense communications equipment were down 12.1 percent.

Demand for heating and air conditioning products fell by 11.6 percent in November, reflecting in part the hard times the nation’s homebuilders are enduring.

The National Association of Realtors said Tuesday that pending home sales in November fell to the lowest level in the eight-year history of its index. The trade group said its seasonally adjusted index of pending sales for existing homes fell to 82.3 from a downwardly revised October reading of 85.7. That was far worse than the reading of 88 that economists expected, according to a survey by Thomson Reuters.

Economists are concerned that the manufacturing sector is being hit not only by a recession in the United States but spreading weakness overseas which has pushed many of America’s major trading partners into downturns and cut into domestic export sales.  My guess is the market can’t handle much more of this bad news.

Google reported earnings and sales for the fourth quarter that missed Wall Street estimates, sending the stock falling after hours.  Shares of the leading Internet search company, which has typically blown away analysts’ forecasts, plunged nearly 9% after the closing bell. The stock had risen about 3% in regular trading Thursday. Google’s stock has taken a hit in recent weeks, dipping nearly 25% below its all-time high of $747 last November.

Google reported that its fourth-quarter revenue came in at $4.83 billion, up 51% from a year ago. Excluding advertising sales that Google (GOOG, Fortune 500) shares with partners (also known as traffic acquisition costs or TAC), the company reported revenue of $3.39 billion, below the $3.45 billion analysts had expected, according to Thomson Financial.

Google posted net income of $1.44 billion, or $3.79 a share, up 17% percent from a year ago. Profits, after backing out certain gains and charges, came in at $4.43 per share, narrowly missing Wall Street’s expectations of $4.44 a share.  Many are calling Google recesion proof but I am not quite convinced of that.

Wall Street investors left for Labor Day weekend pleased about the prospects of an interest rate cut, but they’re likely to come back wanting more evidence that rates are indeed about to come down.  Expect to see some termpered buying on Tuesday morning.

The market has been in better spirits, for the most part, over the past two weeks than in midsummer, when fears that lending troubles would freeze up credit sent stocks tumbling. Although the Fed has injected cash into the banking system and lowered the discount rate - the rate it charges commercial banks for loans - Wall Street’s fears haven’t been completely assuaged.  The Dow Jones industrials and Standard & Poor’s 500 finished slightly lower in a week where it plunged and later recovered. The Nasdaq finished the week higher.

Fed Chairman Ben Bernanke has not come right out and declared that a rate cut will happen, but many investors believe he has telegraphed it by saying the central bank will “act as needed.” Traders who bet on the Fed’s next move are not only pricing in a 100 percent chance of a quarter-point rate cut at its next meeting on Sept. 18, but also are pricing in a 100 percent chance of similar move in October.

The Fed has not reduced the benchmark fed funds rate since 2003, when it declined from a low 1.25 percent to 1 percent. Starting in 2004, the central bank made gradual rate increases until the summer of 2006, when it began holding the benchmark rate at 5.25 percent - the highest it’s been since early 2001, but historically, fairly moderate.  Investors will be curious to see if the Bank of England and European Central Bank decide to lower rates Thursday. Rate cuts abroad could signal a similar move from the Fed.

Investors also want to know if the U.S. job market, which has been one of the more stable parts of the economy, is holding up. The Labor Department’s report comes out Friday. Economists surveyed by Thomson Financial predict that nonfarm payrolls rose in August, that the unemployment rate held steady at 4.6 percent, and that hourly earnings ticked up by 0.3 percent.