With stocks near two-month lows, investors hope the start of second-quarter earnings season and an onslaught of economic news can revive the major indices in the coming week. Given the market's recent habit of punishing the underperformers with more vigor than it rewards the standouts, it might take a lot to get the job done.

About a dozen big tech companies, including Siebel ( SEBL), PeopleSoft ( PSFT) and BMC Software ( BMC), recently have said second-quarter profits would fall short of analysts' expectations. The warnings turned a lot of stomachs and left the Nasdaq down 3% on the week, while the Dow fell 0.7% and the S&P 500 lost 1.2%.

Not all the news was bad. Notwithstanding its Thursday selloff, Yahoo! ( YHOO) managed to double its second-quarter earnings, while General Electric ( GE) and SAP ( SAP) surprised to the upside. GE CEO Jeff Immelt said the economy is the best it's been in years.

"You've gotten a flavor so far with Yahoo! and GE, and you'll get more next week," said Paul Nolte, director of investments at Hinsdale Associates. He cited high hopes for Intel ( INTC) and Juniper ( JNPR), both of which report Tuesday.

Overall, the second-quarter earnings season has potential to make or break the major stock indices' trend for the rest of the year, Nolte thinks. He is concerned, because "we've wiped out all the gains that we slowly built up for the first six months of the year."

Indeed, the Dow Jones Industrial Average is down about 3.3% from early January, while the Nasdaq has lost about 3% and the S&P 500 is flat. The performance is particularly disconcerting to market watchers who had expected a recent flurry of watershed events -- namely the Fed's first tightening and the handover of power in Iraq -- to spark some action.

David Rosenberg, chief North American economist at Merrill Lynch, says interest rates remain the key to equity market performance. "What other catalyst could there possibly be?" Rosenberg recently wrote. "The Iraq handover came and went without much fanfare -- this was supposed to be an inflection point." The S&P is down about 2% from June 28.

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