Stocks tumble again, denting Silicon Valley

May 7, 2010 6:00:25 PM PDT
It's been another difficult day for many people's retirement accounts. Stocks tumbled for a second straight day. The Dow Jones lost another 140 points on Friday -- not a disaster, but what's disturbing is that the index is down almost 6 percent for the week. That is the largest one-week drop in nearly two years.

A sell-off of stocks continued, dropping about 1.3 percent on Friday, but it was nothing like Thursday's nearly 1,000 point drop.

The president and treasury secretary made brief appearances to show they're looking into what happened, but a day later, there are no definitive answers.

"This was a failure, a technology failure. It's as if we had a blackout on the East Coast or if we had a plane crash. We have to get to the bottom of what happened," says Stanford University economist John Shoven.

Shoven heads the Stanford Institute for Economic Policy Research. He and investment advisors say the market turmoil is having an impact on the Bay Area economy. Tech giants Cisco, HP and Microsoft suffered 3 percent drops on Friday, Apple lost 4 percent. As the financial crisis in Greece continues to unfold, the euro's value has slipped, and experts warn of a drop-off in European tourists.

"When you would walk around Union Square, you heard a lot more foreign languages than you had in the past, over the last year or so, because it was a steal to come here when the dollar was down so much," says Carlo Panaccione from the Navigation Group.

While a good number of Silicon Valley companies now make over half of their sales overseas, the situation in Europe may not hurt them.

"Europe does look questionable. To be honest, Silicon Valley is mostly focused on Asia already. It wasn't like Greece and Spain and Portugal were great markets for Silicon Valley," says Shoven.

Half of Merrill Lynch investment advisor Vivek Thoppay's clients are based in India, but they look at the U.S. as a good investment. Will that continue? Efforts to restore confidence in the market will help.

"Hopefully that would be good, but they really want to see how will that affect my returns on the market, how does it affect their investments," says Thoppay.


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