Janna Herron and Adam Shell

USA TODAY

Stocks offered plenty of heart-stopping moments Friday, finally ending the week just beats from an official correction.

The broad Standard & Poor's 500 stock index closed down 1.73 percent, or 9.28 percent from its peak on Sept. 20. A correction is a loss of at least 10 percent from the most recent high. The Dow Jones Industrial Average ended down 296 points, or 1.19 percent and almost 8 percent from its high on Oct. 3.

Investors continue to fret over ongoing trade uncertainties and rising interest rates and how those factors could dampen corporate earnings and future economic growth. Disappointing revenue from Amazon and lower-than-expected earnings from Google late Thursday soured investors and helped fuel Friday’s sell-off.

The tech-heavy Nasdaq closed down 2.06 percent, with shares in Amazon losing 7.82 percent and Google stock down 2.2 percent.

Market watchers head into the weekend wondering what’s next.

“Has it run its course or will it continue and move onto something more substantial?” says David A. Schneider, principal of Schneider Wealth Strategies in New York.

So what has gotten Wall Street all worked up?

Slowdown in corporate profits

While the 500 companies in the S&P 500 are on track for a third consecutive quarter of 20 percent-plus profit growth, investors appear to be worried about weaker results next year.

Analysts have been lowering their earnings projections for 2019 amid fears that the U.S. economy will move closer to its next recession as the benefits from fiscal stimulus such as tax cuts fade and overseas growth contracts. While S&P 500 profits for full-year 2018 are seen growing by more than 23 percent, analysts see the pace of growth slowing to 10 percent next year, according to data from earnings tracker Refinitiv.

In short, one of the main planks of the bull's upbeat market call – robust corporate profitability – is being called into question.

"We really need to see some expectation-beating earnings reports to remind investors why we got to these levels in the first place," Craig Erlam, senior market analyst at Oanda said in an email. Unfortunately, he adds, profit growth is "expected to soften."

Damage from rising interest rates

A main driver of the 9-year-old bull run has been historically low interest rates. Cheap borrowing costs benefited consumers and boosted spending, as Americans were able to get loans for homes and cars more cheaply and pay lower rates on credit-card debt. Similarly, cheap money enabled businesses to grow their businesses and buy back shares of their own stocks, which boosted their earnings per share due to fewer shares for purchase in the market.

But with the cost of borrowed money going up as the U.S. central bank boosts short-term interest rates, the outlook for the economy and stocks looks less attractive.

Any market bounces will prove temporary, as investors become even more worried about the outlook for the U.S. economy, Oliver Jones of U.K. investment firm Capital Economics warns.

Obstacles from overseas

Friction caused by the trade dispute between the U.S. and China has already started to have a negative impact on the results of some U.S. companies. Many CEOs have said they are facing higher costs for things such as steel and aluminum, parts for cars and computer chips. If tensions between the world's two biggest economies worsen, the negative drag on the U.S. and global economy could worsen.

What’s ahead

Next week is another big week for earnings. All eyes will be on those companies and their expectations for future growth. The week also ends with the government’s employment report for October. Another strong report will back the Federal Reserve’s case for future rate hikes and could reignite investor concerns.