Volatility has knocked around stocks on Wall Street in record ways, and the torrent of earnings releases set to hit this week could only exacerbate those moves, analysts say.

Amid an onslaught of news and concern over interbank lending, credit spreads and declining oil prices, the major averages managed to piece together a strong week that built on the lowest levels in five years. Over the last five sessions, the Dow Jones Industrial Average surged 4.7%, the S&P 500 added 4.6% and the Nasdaq Composite jumped 3.7%.

Thus far in October, the Dow has swung each day in ranges of no less than 250 points. In fact, the index saw the first 1,000-point swing in its history just over a week ago, on Oct. 10. Much of this volatility has been blamed on the liquidation of assets due to the deleveraging of hedge funds and mutual funds. Rumors of poor performance at major players like Citadel Investments intensified the effect.

"The indiscriminate selling we've seen has been liquidation, no doubt. Everything is for sale," says Art Hogan, chief market analyst with Jefferies. Hogan points out that the Dow, the S&P 500 and the Nasdaq have all fallen by roughly the same percentage, which indicates that funds are not selling stocks in one industry to invest in another.

"To a certain extent, the news about the deleveraging of the hedge fund industry is already behind the event," Hogan continues. "If you talk to a lot of hedge funds, they'll tell they have a very high level of cash right now. As we come into next week, the question now is whether the indiscriminate selling is behind us or not, are cash levels high enough for everyone's comfort, and can we start focusing on fundamentals."

The health of credit markets also continues to hang over the market. Credit markets have loosened slightly, as the three-month dollar London interbank offer rate, or Libor -- a measure of the rate banks charge one another for large loans -- has continued to decline. However, investors have been fearful of entering back into equities, driving the yield of the three-month U.S. Treasury note below 1%.

"You have a problem with the three-month Treasury," says Robert Pavlik, chief investment officer with Oaktree Asset Management. "That is still unbelievably low. People are still hesitant to exit out of that trade, get back into the market and put some risk on the table. Hopefully, that will continue to loosen, yields will back up a bit and some money will come back into the market."

Market participants are hoping the burst of earnings reports in the coming week will provide equity markets with a much needed shot in the arm. As always, what the companies say about future earnings and expectations will ultimately drive the market. However, there is fear companies will not offer the clarity many are hoping for.

Hogan says that the bar has been set so low it shouldn't be hard for corporate America to beat expectations, but it is also hard for executives to say anything with certainty about the fourth quarter or 2009.

"Last quarter, we had CEO doom-and-gloom that hasn't surfaced yet, but we haven't had any real clarity yet either," he says. "We haven't seen a catalyst, yet, and that'll be a chief part of the focus."

"There are a lot of companies with a lot of guidance that will come out, and that'll continue to lead the market around by the nose," says Pavlik. "The guidance will be key and could create additional spikes higher in the Chicago Board Options Exchange Volatility Index, or VIX, which has been at all-time highs. I'd like to think that volatility will go away sometime soon but I doubt it'll happen. People are too nervous."

On Monday, Halliburton ( HAL) will report before the market opens, and Dow member American Express ( AXP), SanDisk ( SNDK) and Texas Instruments ( TXN) will be out after the closing bell.

Several Dow components will be out with results on Tuesday, including 3M ( MMM), Caterpillar ( CAT), DuPont ( DD) and Pfizer ( PFE), all of which report before the start of trading.

Tuesday's late results will be headlined by Yahoo! ( YHOO), with E*Trade ( ETFC), Boston Scientific ( BSX) and VMware ( VMW) earnings also on tap.

Wednesday will bring another busy earnings day, with Dow components AT&T ( T), Boeing ( BA), McDonald's ( MCD) and Merck ( MRK) all set to report in the morning.

Also due early Wednesday are quarterly results from ConocoPhillips ( COP), EMC ( EMC), Freeport-McMoRan ( FCX), Philip Morris ( PM) and Wachovia ( WB), among others.

After Wednesday's close, tech giants Apple ( AAPL), Amazon.com ( AMZN) and Baidu.com ( BIDU) will report, in addition to Sallie Mae ( SLM) and Amgen ( AMGN).

Thursday will bring earnings releases from Dow component Altria ( MO), Bristol-Myers Squibb ( BMY) and UPS ( UPS) in the morning, among others. After the close, Microsoft ( MSFT) will headline the late reports.

Friday's release calendar is considerably lighter, with Ingersoll-Rand ( IR) and Ericsson ( ERIC) headlining the earnings reports.

Optimism is also being fueled by an article Warren Buffett penned for The New York Times, in which he said he has been buying American stocks for his personal account. If prices keep looking attractive, Buffett said he would swap his whole portfolio, made up entirely of U.S. government bonds, for U.S. equities. Market observers believe Buffett's op-ed piece could rally buyers and bring cash in from the sidelines.

"If people come to their senses, they'll realize what Buffett is saying is historically true," says Hogan. "You should be fearful when people are greedy, and you should be greedy when people are panicking. We've seen panic selling and that's when people should be buying. It's an extremely inspirational op-ed piece and a good reminder for all of us."

Another positive for traders is the economic calendar is lighter than it has been in previous weeks. Aside from weekly jobless claims that are released every Thursday, traders will only have to contend with a report on leading economic indicators on Monday as well as the latest read on existing home sales, which are expected to rise slightly, on Friday.

Investors will also be watching testimony from Federal Reserve Chairman Ben Bernanke, who will offer his economic outlook Monday to the House of Representatives, although no surprises are expected. Also on Monday, Fed Governor Randall Kroszner will speak about risk management at a conference in Baltimore.
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