Earnings from big companies like Intel Corp. and Pfizer Inc., as well as key inflation reports, will help determine whether US stocks will continue to skid lower or bounce back this week.
Today kicks off one of the heaviest weeks of the quarterly earnings season and some of the other companies slated to report include General Motors Corp. and Ford Motor Co., Internet companies eBay Inc. and Yahoo Inc., financial heavyweight Merrill Lynch & Co. and soft-drink giant Coca-Cola Co.
"Earnings are starting to dominate the market," Rick Meckler, president of investment firm LibertyView Capital Management, said over the weekend. "The bigger names are going to set the tone for their sectors."
Last week, the blue-chip Dow Jones industrial average suffered its worst weekly decline since March 2003 - down 3.57 per cent. The broad Standard & Poor's 500 Index - down 3.27 per cent - and the tech-laced Nasdaq Composite Index - off 4.56 per cent - had their biggest weekly drops since August 2004.
On Friday, all three stock indexes ended at fresh lows for the year and their lowest closes in five and a half months. The sell-off was driven by disappointing results from International Business Machines Corp., released after Thursday's closing bell.
Investors will scour data on consumer prices and producer prices for any signs of inflation, strategists said.
The US Producer Price Index for March is due tomorrow and economists expect a 0.2 per cent gain for the core figure that excludes food and energy. The Consumer Price Index for March is due on Wednesday, with a rise of 0.2 per cent expected for that core figure, according to economists polled by Reuters.
"During this coming week, what will really capture the attention of investors will be the monthly inflation reports," J.P. Morgan's Mr Chan said.
"There is still some lingering fear of inflation, even though equity market investors have diversified their fears somewhat and are also now looking at the possibility that the economy is not doing as well."
With the health of the US economy in focus, investors are likely to watch the leading economic indicators for March, which are due on Thursday, Mr Chan said.
Other economic data on tap this week includes March housing starts tomorrow. Investors will watch them to see if higher interest rates are dampening consumers' voracious appetite for real estate, strategists said.