With stocks taking their worst tumble in market history on Monday, global fears of an economic meltdown followed. The Dow Jones industrial average dropped nearly 800 points, credit markets seized, and the only light at the end of the tunnel was the possibility that lawmakers would revisit and revise the historic bailout plan to stop the U.S. economy from completely falling apart.
The market collapse on Sept. 29 affected all sectors of the financial market. Based in the mortgage crises that swept the nation over the last year, the market finally hit the wall. Investment firms fell, banks failed, and investors lost confidence, all amounting to an economic Armageddon. No one will be spared, one way or another, from this.
Every section of the market is now affected. What started in housing has moved like a virus through all other sectors. Businesses will not be able to get short-term loans to cover expenses while they await revenues, students will face substantial obstacles when attempting to get student loans and mortgages … don't even ask.
All of this failure has trickled down to consumers, and the amount of spending they will do in the future looks grim - and that could possibly last for a few years.
Tech stocks felt this on Monday, as Apple, Inc. had its worst drop in seven years, falling a whopping 18 percent, to close at nearly $100. To put that in perspective at how bad consumer spending and investing has become, Apple traded near $200 at the end of last year. That loss is in the billions for investment dollars that Apple could have used for research for new products, as well as working on upgrading its current products.
Apple wasn't the only tech company to feel the impact; Google fell below $400 in trading for the first time in two years, and Microsoft got slammed with a near 9 percent fall of shares, prompting the company to issue a statement encouraging the passing of the bailout.
What does this all mean for America, and quite possibly, the rest of the world? Technology companies are going to become more skeptical about releasing new products and conducting research that usually has costs in the millions. This doesn't mean new, exciting products won't be released, but it does mean that fewer will be, and even fewer will be sold. If Microsoft has been working on something epic, like its own iPhone, it most likely won't release it in the near future, but would wait until the stocks bounced back and consumers had more confidence in the market and more money to spend.
The upcoming holiday season is also forecasted to not be so jolly. Circuit City, a dying electronics retail chain, warned of it. Obviously, the warning should be taken seriously: All this talk about job losses, inability to get loans, credit companies failing all leads to minimal spending by consumers. The holiday season, one that all major manufacturing companies rely on to boost figures and increase revenue, will be a let-down.
All the major tech companies will not disappear like Bear Stearns did, but they certainly will take a serious financial hit and will take fewer risks in developing new products. Across the board, everyone is hurting, that's not debatable. A lot of companies will fail, but it is very unlikely that tech companies will not rebound. I would say that tech companies lay low for a while, wait until there is more confidence in the market, then get things back to the way they were before this "great economic abyss."
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