Stock market turmoil leaving Silicon Valley vulnerable amid coronavirus outbreak

SAN JOSE, Calif. (KGO) -- Fears about the novel coronavirus and its impact on the economy, especially the oil industry, sent financial markets into a free fall today.

The Dow Jones dropped more than 2,000 points -- its worst single-day drop since the 2008 financial crisis.

At one point, trading was halted for 15 minutes to try and slow the purge.

The NASDAQ and the S&P 500 also tanked down 624 and 225 points.

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One stock that didn't suffer: Oakland based Clorox.

A leading maker of cleaning products, it managed to gain ground, finishing up nearly one percent today.

Investors already were rattled by the spread globally of the coronavirus, then oil prices started plunging as a result of a price war between Saudi Arabia and Russia.

Uncertainty creates a lack of confidence in where the economy is heading.

"It indicates people are concerned about a recession, and I think there's reason to be," said Matthew Holian, economics professor at San Jose State University. "People are staying home from work, not traveling, not spending."

Many analysts believe Silicon Valley is especially vulnerable to the current turmoil. Major tech companies, including Apple, Facebook and Google, saw their stock prices drop between six and eight percent Monday.

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While no one likes to forecast a recession, Silicon Valley saw over 105,000 jobs lost during the 2008 recession and it took five years to recover those losses.

Those are statistics compiled by the Institute for Regional Studies at Joint Venture Silicon Valley.

Among the concerns is how dependent Valley tech firms are on factory labor and parts made in China where coronavirus caused a supply disruption.

"Whether it's through supply chains, whether it's through international collaborations on research and development, whether it's on bringing in immigrants from around the world and top tech talent to work here, we are certainly I think more exposed than other parts of the country and other parts of the world," said Peter Leroe-Munoz, senior vice president of technology and innovation policy at the Silicon Valley Leadership Group.

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The oil price war in time will result in lower gas pump prices, which is good for consumers. But it's also bad news for Silicon Valley companies promoting clean energy because the benefit of alternative energy is tied to high oil prices.

"It's bad for not just the oil industries, but all the industries that compete with oil, so solar, coal, wind and all those related industries," said Prof. Helen Popper, a Santa Clara University economist.

If economic uncertainty persists, it will put pressure on the government -- from the Federal Reserve to Congress -- to stimulate the economy with potential interest rate cuts, bailouts or tax cuts.
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