After another week of carnage in the tech sector, investors will be looking for something, anything, to assuage their fears. Next week, a trio of bellwether companies facing some serious issues will report their quarterly results.
To put this week's collapse in perspective, the Nasdaq composite has lost more than 28 percent of its value in the past month.
However, the Nasdaq was trading at these levels in December after adding more than 1,000 points in less than two months.
"I wouldn't even try to figure out how low it could go," said Larry Rice, chief investment officer at Josephthal Lyon & Ross of the Nasdaq. "The market got carried away to the extreme on the upside and now it is going to get carried away to the extreme on the downside. The Dow coming down does not surprise me because it has been going up like a rocketship in the past few weeks."
For the week, the Nasdaq plummeted a staggering 1,126 points to end at 3,320.04 while the Dow Jones industrial average shed 804 points to close at 10,307.32.
On Friday, investors were further unnerved by the Consumer Price Index, which rose 0.7 percent last month, stronger than its 0.5 percent increase in February and above the 0.4 percent gain predicted by analysts.
"As the averages go lower, the cash has to go somewhere and right now I'd say it's sitting on the sidelines," said Richard Babson, chairman and president of Babson-United Investment Advisors.
Higher consumer prices rekindled concern that the Federal Reserve will boost short-term interest rates when its policy-setting panel meets May 16. The central bank has boosted short-term rates five times since last June to slow the booming economy.
Pierre Ellis, senior economist at Primark Decision Economics, said the CPI report raised the prospect of the Fed raising interest rates by a 0.50 basis points, instead of the 0.25 basis points Wall Street has expected.
More frightening, at least in the short-term, is the fact that major tech bellwethers such as Advanced Micro Devices Inc. (NYSE: AMD) and Sun Microsystems Inc. (Nasdaq: SUNW) posted spectacular earnings in their latest quarters only to watch their stocks lose ground.
In a market that's reaped the rewards of strong momentum buying, the comeuppance is a bitter pill to swallow.
Traders hope a flood of earnings, particularly those from the likes of IBM, Microsoft and Intel will re-ignite the Nasdaq.
IBM (NYSE: IBM) will report its first-quarter results next week and there are already rumblings that it may disappoint investors.
On Friday, Big Blue said it expects to show almost no revenue growth, largely due to a lingering slowdown in spending among customers bracing for the Y2K meltdown that never came.
"With weak hardware sales adversely impacting services and software growth, IBM may grow overall revenue by less than our first quarter forecast of 2 percent," Wit Soundview analyst Gary Helmig told Reuters.
Corporate capital spending on computers generally failed to return immediately after the one-time millennium date change, as many had hoped. Analysts appear uncertain as to when corporate customers would resume spending.
In the first quarter of 1999, IBM had revenues of $20.3 billion.
First Call consensus expects it to earn 78 cents a share this time around.
Last quarter, IBM topped analysts' estimates, earning $2.1 billion, or $1.12 a share.
Microsoft Corp. (Nasdaq: MSFT) will also report its third-quarter results, with analysts predicting a profit of 41 cents a share.
Its shares have slumped in the past month, no doubt a reaction to its ongoing antitrust battle with the Justice Department.
However, Microsoft will likely top the consensus number, buoyed by sales of its new Windows 2000.
Last quarter, Microsoft raked in $2.4 billion, or 47 cents a share, on sales of $6.1 billion.
Finally, Intel Corp. (Nasdaq: INTC) will have a hard time upstaging AMD in its first quarter.
While most analysts are predicting another robust quarter, AMD has clearly made some inroads into Intel's high-end processor business with its Athlon line.
First Call consensus sees Intel earning 69 cents a share this quarter.
In its fourth quarter, Intel pocketed $2.4 billion, or 69 cents a share, on sales of $8.2 billion.