Investors will get a break from the earnings onslaught next week as only a handful of minor players will report their quarterly results. But there's still plenty of news to digest after a busy week of profit warnings, earnings and key economic reports.
For the week, the Dow Jones industrial average fell 222 points to 10,511.17 while the Nasdaq composite dropped 430 points to 3,663.11.
The sell-off in technology shares began after major chip and telecommunications equipment makers warned of lower-than-expected sales and earnings in the third quarter.
Finnish cellular phone maker Nokia (NYSE: NOK) lost more than 20 percent of its value after warning that its third-quarter earnings will be flat with the year-ago period. Texas Instruments (NYSE: TXN), Motorola (NYSE: MOT) and Ericsson (NYSE: ERICY) also felt some selling pressure.
On Friday, investors got the news they were hoping to avoid when the government reported the gross domestic product (GDP) rose by 5.2 percent in the second quarter, exceeding Wall Street's forecast for a gain of 3.8 percent after a downwardly revised 4.8 percent rise in the prior quarter.
"The brief that a stronger economy could overcome slower earnings growth was quickly put to bed. This is the reaction the market should have with the GDP number at 5.2 percent," said Barry Hyman, market strategist for Ehrenkrantz, King, Nussbaum, Inc. "This clearly puts the Fed on the aggressive track again."
The Federal Reserve Board will meet Aug. 22 to determine the future of short-term interest rates. Analysts are still mixed on whether the Fed will raise rates by another quarter point or leave them unchanged through the fall.
Amazon.com (Nasdaq: AMZN) was in the news all week.
The embattled online retailer topped analysts' loss estimates in its second quarter but posted disappointing sales of only $578 million. Analysts were looking for around $600 million in the quarter.
Amazon.com shares fell to a 52-week low after the earnings report as a flock of analysts' downgraded the stock and lowered estimates.
CEO Jeff Bezos attempted to reassure analysts in a conference call that he was "relentlessly committed" to turning a profit, saying that half of the company's technology spending is allocated to boost profits.
Still, most analysts are concerned that Amazon.com will never be able to duplicate the success its enjoyed selling books in other consumer products.
"We still believe that, after it settles from the shock of this quarter, the stock could perform well for the balance of the year, as a result of improved sentiment toward consumer e-commerce as we approach the holiday season," Merrill Lynch's Henry Blodget wrote in a research note.
Compaq Computer (NYSE: CPQ) finally gave its investors some good news when it met analysts' estimates, earning $387 million, or 21 cents a share, on sales of $10.1 billion.
Compaq officials said it expects double-digit sales growth in the second half.
InfoSpace (Nasdaq: INSP) made an interesting move this week, acquiring Go2Net (Nasdaq: GNET) in a stock deal valued at more than $4 billion.
However, its shares have slipped since announcing the deal.
Looking ahead to next week, Computer Sciences (NYSE: CSC), Winstar Communications (Nasdaq: WCII) and S1 (Nasdaq: SONE) lead a light week of earnings reports.