Securities markets and government regulators, especially in times of financial crisis like these, eye each other warily, each trying to ascertain what the other knows and what the other is going to do.
The government looks at securities prices as an important source of information about when it should intervene to rescue a bank, like Citigroup, or a major industrial company, like General Motors. Meanwhile, investors are doing all they can to figure out not just the economic prospects of companies, but also the probability that government will intervene in troubled firms. If investors expect the government to step in to save a firm, they might bid up the security's price to a level not warranted by the fundamentals.
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