Investors will face a barrage of US corporate earnings this week, including reports from heavyweights 3M Co and Intel Corp, both among companies expected to provide clues about the health of the US economy.
The coming week also features a full roster of speeches by Federal Reserve officials, so inflation jitters are likely to remain on the front burner.
Recently, comments from central bank officials on the threat of inflation have spooked stock investors by raising the possibility of more interest-rate hikes. So this week's Fed speeches - including one from Chairman Alan Greenspan on Monday - will be closely followed.
Investors will also sift through the torrent of quarterly reports due this week, looking for signs that high energy prices or fallout from hurricanes Katrina and Rita hurt corporate profits.
Even so, market strategists said as third-quarter earnings reports pick up pace, investors could find reasons to bid the stocks higher as companies shed light on the business prospects for the rest of the year.
"I think we're going to bounce. You've got prices at a point where I think people look at them as attractive, once you shake out more earnings reports," said Tony Dwyer, chief equity strategist at FTN Financial.
Since the start of October the Nasdaq Composite Index is off 4 percent and the Dow Jones industrial average is down 2.7 percent as comments from Federal Reserve officials fanned more worries about inflation and more interest rate hikes.
Heavy equipment maker Caterpillar Inc and health-care company Johnson & Johnson, both Dow components, also post their quarterly results this week.
As of Monday, earnings for companies in the Standard & Poor's 500 Index were expected to have risen by 14.3 percent from a year ago, according to Reuters Estimates.
Month to date, the broader Standard & Poor's 500 Index is down 3.4 percent, and has only managed to close higher in only two sessions so far.
Alfred Kugel, chief investment strategist at Atlantic Trust/Stein Roe, said he believes much of the worrisome news may have already have been priced into the market, brightening the prospect for a bounce - if third-quarter earnings come in as expected.
"We've now changed the valuation of the stock market quite a bit," Kugel said. "If anything, the earnings estimates have been going up and stocks have been going down. The price-to-earnings ratio on forward earnings is now down to about 15 times, which is very low relative to interest rates and inflation at the present time."
But not everyone is so sanguine about the markets' prospects, ahead of earnings and economic data set to shed more light on the effect of the two recent hurricanes.
"The issue with this quarter lies in the fact that you have hurricane-related issues playing into the fray. I think it's going to make for a somewhat murky earnings season," said Bryan Piskorowski, market analyst at Wachovia Securities LLC. in Richmond.
"Earnings," he said, "are not something we can hang our hat on as a potential catalyst."
Citigroup Inc, the world's largest financial services group also is among the companies due to post quarterly results in the upcoming week. Earnings also will be released by General Motors Corp, whose shares came under pressure this past week as its largest auto parts supplier Delphi Corp slid into bankruptcy.
Among economic data, the US Labour Department is due to release the September producer price index on Tuesday. Economists' expectations are for a rise of 1.1 percent in the overall PPI in September, up from a 0.6 percent gain in August.
On Wednesday, the Commerce Department is due to release the September housing starts report, while on Thursday, the Federal Reserve Bank of Philadelphia will release its regional survey of manufacturing activity in October at noon EDT (1600 GMT).
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