Few thought we'd ever see Nasdaq 2000 again, not to mention the S&P 500 hurtling toward 1000. What could take the market down further?

1) Nasty earnings warnings from the likes of IBM (IBM:NYSE - news - boards), AOL Time Warner (AOL:NYSE - news - boards), GE (GE:NYSE - news - boards), Citigroup (C:NYSE - news - boards) and American Express (AXP:NYSE - news - boards). After many months of what looks very much like earnings management, any shortfalls these firms report could be sizable.

2) The dollar dives, as foreigners flee the U.S. The dollar would initially weaken against the euro, since the Japanese appear to be dead set on devaluing the yen. That said, if the U.S. markets were to get really hairy, the near-zero interest rate in Japan begins to look a lot more attractive than, say, U.S. corporate or government-agency bonds. Bianco Research said Monday that the Japanese bought $23.8 billion of government agency bonds in 2000, and $15 billion of U.S. corporates. Both are record totals. What if the Japanese sell even small parts of those positions? What's more, if the dire situation in Japan finally causes that country's banks and firms to properly restructure, that country's market will offer the best investment opportunity on the planet, sucking liquidity away from America.

Of course, a sliding dollar increases inflation pressures and puts a stay on interest rate cuts.

3) Deteriorating economic news. The only part of the economy showing undeniably good numbers is the housing sector. If house prices plummet, that source of growth could quickly evaporate. On the flip side, if inflation continues its unnerving rise, the Fed could be forced to hold back on interest rate reductions.

4) A-bomb on Wall Street. How long before a bank or brokerage gets into real trouble? This would add systemic financial-sector risk to recession and market risk. The Fed could reduce rates all it likes, but a shock to the financial sector could put a heavy crimp on lending. This is what's happened in Japan. Watch commercial banks' bad-loan numbers in first-quarter results and scour 2000 annual reports, which are about to be released, for commentary on credit quality. Look out for brokerage trading losses, possibly from credit derivatives (see the comments on these instruments released last week by the Old Lady of Threadneedle Street).

Remember that U.S. banks are already behaving like their Japanese brethren in lending to troubled clients that could possibly go to the wall without new credits. Don't be too surprised if we soon get stories out of Washington soon saying that Treasury Secretary O'Neill and Fed Chairman Greenspan are leaning on banks not to cut off credit lines to cash-strapped corporate clients. But who gets the bailouts first? Xerox (XRX:NYSE - news - boards) or Lucent (LU:NYSE - news - boards)?