Turmoil abroad, disappointing earnings reports and more profit warnings conspired to send the stock market into a free fall again this week. Investors will get another reality check next week when the likes of Intel, IBM, Apple and AOL report earnings.
For the week, the Dow Jones industrial average plunged 404 points to 10,192.18 while the Nasdaq composite shaved off 45 points to 3,316.52.
"There's a realization that's taking place in the marketplace that a soft landing for the U.S. economy is incapable of generating a continuation of the type of earnings that the market has become accustomed to," said Robert J. Barbera, chief economist at Hoenig & Co. "A return to a more restrained growth rate is going to adversely affect the top and bottom lines of corporate earnings."
Technology stocks got a boost Friday when Goldman Sachs' chief strategist Abby Joseph Cohen said the recent market slump is overdone and makes stocks a good buy, especially because a strong U.S. economy will keep boosting corporate profit growth.
Yahoo! (YHOO) shares fell to a 52-week low this week despite beating analysts' estimates in its third quarter.
In the quarter, it earned $81.1 million, or 13 cents a share, on sales of $295.5 million.
It wasn't enough to keep most analysts from downgrading the Internet bellwether on concerns of shrinking advertising sales going forward.
Gateway (NYSE: GTW) shares shot up 22 percent Friday after it met analysts' estimates in its third quarter, earning $152.6 million, or 46 cents a share, on sales of $2.53 billion.
Lucent (NYSE: LU) was tagged after it warned that it would miss analysts' reduced estimates this quarter. Redback Networks (Nasdaq: RBAK) and Motorola (NYSE: MOT) lost ground despite posting decent sales and earnings in their latest quarters.
Looking ahead to next week, investors will have dozens of technology earnings reports to plow through.
IBM is one of the few big-name technology firms that actually sees strong growth in the next couple quarters.
Last quarter, IBM earned $1.9 billion, or $1.06 a share, on sales of $21.7 billion.
Analysts are expecting the online service provider to earn 13 cents a share in the quarter.
Last quarter, AOL raked in $334 million, or 13 cents a share, on sales of $1.9 billion.
Company officials said it will report sales of between $1.85 billion to $1.9 billion, just slightly better than $1.83 billion it recorded in what most analysts considered a disappointing third quarter.
Analysts originally expected the PC maker to earn 45 cents a share.
In the third quarter, Apple pocketed $200 million, or 55 cents a share, on sales of $1.83 billion.
Analysts lowered their third-quarter estimates to 38 cents a share.
Last quarter, Intel posted a profit of $3.5 billion, or 50 cents a share, on sales of $8.3 billion.