Morning Money Memo:

Is it sentiment or fundamentals? That's the question facing Wall Street after a sharp stock market sell-off. The Nasdaq index dropped 3.1 percent Thursday, its biggest decline in nearly two and a half years. Stock futures fell again this morning. Many of the stocks that had soared the most in the past year took the deepest dive Thursday. Biotech and Internet stocks were hard hit. Biotechnology has turned volatile in recent weeks as regulators scrutinize the cost of their drugs and investors worry their earnings won't justify lofty stock prices. Investors are also worried that high-growth companies like Twitter and Facebook have become too expensive. The Nasdaq is down 7 percent from its recent high in early March. The S&P 500 lost 2.1 percent Thursday.

The first-quarter earnings season will kick into high gear next week. JP Morgan Chase, America's largest bank, announced a 19 percent drop in earnings compared with a year ago. Its stock price fell 2 percent. A low bar has been set for most corporate reports. "Harsh winter weather seems to have delivered a setback." says Kate Warne, an investment strategist with Edward Jones. "Investors are looking for what companies say about the rebound they've seen more recently in their business as the weather's gotten warmer." Economic fundamentals may have improved with signs the jobs market and economy are strengthening.

The Heartbleed bug may be even more severe than first reported. Two major companies that make Internet hardware, Cisco and Juniper Networks, say several of their products have the flaw. "That means hackers might be able to capture usernames, passwords and other sensitive information as they move across corporate networks, home networks and the Internet," The Wall Street Journal reports. Heartbleed is causing major security headaches for website firms. Consumers have been left wondering whether they should change their passwords to prevent theft of their email accounts, credit card numbers and other sensitive information.

Another retailer is in trouble. Coldwater Creek has filed for Chapter 11 after failing to find a potential buyer or a source of capital to help fund its turnaround efforts. The company said its declining financial liquidity, tough retail conditions and an inability to find other viable options drove it to file for bankruptcy protection. The company says that it expects to start sales to liquidate inventory in early May

Treasury Secretary Jacob Lew is warning Russia that it could face tougher economic sanctions because of its actions in Ukraine, but so far other economic powers are showing a reluctance to go as far as the United States. Lew delivered his warning to the Russian finance minister, telling him that the Obama administration was willing to impose "additional significant sanctions" if Russia escalates the Ukraine situation. A senior European Union official says it will consider broadening sanctions against Russia. The official says ministers meeting in Luxembourg Monday could order a new list of targets, which would require unanimous agreement among the 28 nations.

Richard Davies Business Correspondent ABC News Radio abcnews.com Twitter: daviesnow