By Chuck Mikolajczak

Stocks closed the curtain on the George W. Bush era on Friday, capping an eight-year run that produced a 36.9 percent drop in the benchmark S&P 500 <.SPX> and more than $4.6 trillion of lost stock market value.

With that dismal context, investors are eager to see what Barack Obama has up his sleeve to jolt the economy out of recession and restore confidence to battered financial markets.

Obama will be sworn in at midday on Tuesday as the 44th president of the United States and as the nation's first African-American head of state.

Markets on Monday will be closed for the Martin Luther King Jr Day holiday.

The big impediment in the holiday-shortened week is a full earnings calendar.

Earnings for the last three months of 2008 are forecast to have fallen more than 20 percent from the year before, according to ThomsonReuters Research, marking a record six straight quarters of declining profits.

And if what investors have heard from companies so far this year is any guide, chances for a profit rebound are slim.

"The key is what the new administration does -- do they get out of the box quickly?" said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York.

"A big thing they will deal with is how to stop the problems with the banks. I don't think anybody expects major announcements at the inauguration but in the days following, people want to hear some type of plan that things are going to be different."

The latest earnings reporting season got off to a rocky start this past week, when aluminum producer Alcoa Inc posted a wider-than-expected quarterly loss.

Any outlooks from companies suggesting that the year-long recession is getting worse will present a major hurdle for the stock market trying to sustain a recovery from its November 21 bear market low.

Concerns about mounting credit losses for banks and worries about the fate of Citigroup and Bank of America have contributed to a pullback in the market's advance from the November low.

The benchmark S&P 500 started 2009 up more than 20 percent from that low, but ended Friday up only about 13 percent.

Obama scored overcame his first legislative hurdle when an attempt to block the release of the remaining $350 billion in the government's financial rescue fund was rejected in the U.S. Senate on Thursday.

Earnings set to pour in this week include reports from Dow components International Business Machines Corp , Johnson & Johnson , United Technologies , Microsoft and General Electric .

Other technology bellwethers reporting results are Google Inc and Apple Inc , which on Wednesday said Chief Executive Steve Jobs would take a medical leave of absence through June.

Even though quarterly results are likely to be poor, some analysts argue the market will discount weak results.

"The news has been so bad for so long that it's already built in," said Terry Morris, senior vice president and senior equity manager for National Penn Investors Trust Company in Reading, Pennsylvania. "Pessimism has gotten to a point where the market will start shrugging off bad news and start looking forward."

Wall Street ended the week on a modestly upbeat note on Friday, but confidence in the financial system remains shaky at best.

For the week, the Dow was down 5.6 percent, the S&P 500 fell 5.9 percent and the Nasdaq lost 3.02 percent. All indexes are squarely in the red for the year to date.

The economic calendar is light this week, with the highlight a report on weekly initial jobless claims on Thursday, which should provide further insights into labor market deterioration.

One other area of interest will be housing starts, also due Thursday. Investors may well welcome a drop in starts as being helpful to working off the overhang of unsold homes.

"We need to see continued signs of housing stabilizing, that is, inventory of unsold homes declining," Ghriskey said. Until we see some of those signs, there is uncertainty."

(Editing by Leslie Adler and Maureen Bavdek)