What goes up must come down. Just two days ago, investors seemed almost giddy following Cisco Systems quarterly results — the Nasdaq spike roughly 100 points. Today, however, the Nasdaq dipped slightly in mid-day trading action. News of two rating agencies cutting WorldCom Inc.'s debt rating to "junk" status helped fuel the slide.

Moody's Investors Service slashed its rating of WorldCom Inc. from "Baa2" to "Ba2," an unusal three-notch drop. WorldCom's deteriorating operating performance and heavy debt led to the downgrade, according to Moody's. Fellow ratings firm Fitch Ratings also downgraded WorldCom's debt rating to junk status.

WorldCom has been plagued by a slowdown in consumer spending, a lagging long-distance market and questions from the Securities and Exchange Commission about some of its accounting practices. Just 10 days ago, WorldCom front man Bernard Ebbers stepped down, under pressure.

Despite the rare three-notch drop by Moody's, WorldCom insists the downgrade will have no effect on the company's liquidity, including its bonds and credit facilities. The company has received a waiver from its lenders on its accounts receivable securitization program — a move, WorldCom contends, that will cancel any trigger effect the ratings cuts might have had on the program. WorldCom also is negotiating to replace an existing $2.65 billion bank credit facility set to expire on June 7.

During a conference call yesterday afternoon, WorldCom Chief Executive John Sidgmore did say the company may need to cut another $1 billion out of its capital expenditure budget this year.

WorldCom shares had lost 15 percent of their value as of 12:34 p.m. EDT, trading at $1.69, which is teetering close to the company's 52-week low of $1.66. In June 1999, the company's stock was trading at more than $60 a share.

The move by the ratings firms, and the possibility of further downgrades, has many in the industry wondering whether bankruptcy will be in WorldCom's future. A high-level WorldCom official says no.