Stock markets in many parts of the world sputtered this week amid worsening news in the financial sector, and despite some positive signs from places such as China.
The most-watched technology sector stock index, the Nasdaq Composite Index, is in danger of breaking through the 52-week low set last November amid continued investor worries about the impact of the downturn on consumer spending on gadgets such as PCs and smartphones.
There are reasons to be pessimistic.
The past week has seen a continued flow of negative news for tech companies, including the announcement by flash chip maker Spansion that it had filed for bankruptcy protection due to its heavy debt burden.
The Nasdaq ended down 4 percent at 1299.59 on Thursday, dangerously close to its Nov. 21 low, when traders sent the index down to 1295.48 during trading hours.
Should the index break though the November level, traders may start to look to its dotcom-bust low of 1108.49, which it hit on October 10, 2002, as the next major barrier, analysts say.
The Nasdaq's drop came despite a steady flow of announcements from Europe's largest IT fair, Cebit.
But even the most optimistic trader had to notice that the trade show saw the lowest turn-out by exhibitors in a decade due to the global recession.
At least Cebit provided California Governor Arnold Schwarzenegger a forum to admonish people to stop whining about the economy. People need to look forward and find ways to stimulate the economy, he said, adding that environmental technology is one area with significant potential.
Still, the main problem with the global economy is the financial troubles caused by bad loans (many in California), not problems specific to the technology sector. And in fact, there were some signs last week that demand from China has boosted some electronics makers.
The build-out of China's 3G (third generation mobile telecommunications) network, which is a priority alongside the government's 4 trillion Chinese renminbi (US$585 billion) economic stimulus package, is lifting some chip makers.
Altera and Xilinx of the U.S. and MediaTek of Taiwan are among companies that revised their quarterly sales guidance up this past week because of increased orders related to telecommunications spending in China.
Similarly, the world's largest contract electronics manufacturer, which assembles products ranging from Apple iPhones to Sony PlayStation 3s, is hiring again in China after months of layoffs.
Hon Hai Precision Industry, which operates under the trade name Foxconn, said it is increasing its payroll in China by 5 percent because the downturn has not been as bad as expected so far. The company employs hundreds of thousands of workers in China.
Chinese investors have taken note of these developments, as well Chinese Premier Wen Jiabao's comment that the nation's economy may grow 8 percent this year, and sent China's major stock indexes up this week.
The Shanghai Stock Exchange Composite Index ended at 2193 on Friday, up 5.3 percent for the week. The Shenzhen Composite Index rose 8.5 percent to 715 over the same time.
By contrast, U.S. equities have stumbled.
The Nasdaq's decline has been outdone by the closely watched Dow Jones Industrial Average and S&P 500 Index. The Dow fell 4.1 percent on Thursday to 6594.44, its lowest close since April 15, 1997. The S&P 500's 4.3 percent slump to 681.47 the same day put it at its lowest close since September 18, 1996.
Many publications and analysts have given up on predicting a bottom for the markets, but the world's most successful investor, Warren Buffett, provided a few of tidbits of advice in his annual letter to shareholders, which came out last Saturday.
"When investing, pessimism is your friend, euphoria the enemy," he said, referring to his own strategy of buying stocks when everyone else is fleeing the markets and being cautious when everyone else is piling in.
He also offered up a reminder that the U.S. has faced down worse problems over the past century than the current situation, including two world wars and a great depression.
"Though the path has not been smooth, our economic system has worked extraordinarily well over time," he wrote. "It has unleashed human potential as no other system has, and it will continue to do so. America's best days lie ahead."