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There's nothing like a long losing streak to scare investors, and today's market action did nothing to allay those fears. With a 31-point drop, the Dow Jones Industrials (INDEX: ^DJI ) fell for the sixth straight day, as many see a sort of Bizarro-Goldilocks scenario in which the economy is weak enough to hurt stocks, but not so weak that it warrants action from the Federal Reserve to take further measures to boost growth.
Today's weakness in the tech se ctor highlights the tug-of-war between weakness and growth, as the Nasdaq Composite (INDEX: ^IXIC ) was the worst performer of the major indexes today. With the three Dow stocks that trade on the Nasdaq, Intel (Nasdaq: INTC ) , Cisco Systems (Nasdaq: CSCO ) , and Microsoft (Nasdaq: MSFT ) , all falling more than 2%, the obvious place to lay blame was yesterday's data from Gartner and IDC that worldwide sales of PCs fell 0.1% during the second quarter, falling short of an expected 2.1% advance. U.S. sales declines of 10.6% pose an even bigger challenge for Intel and Microsoft, whose most successful products are tied to PCs.
From a longer-term perspective, what's clear is that investors aren't giving these companies full credit for being able to innovate their way toward future growth. Despite tech venture capitalist Marc Andreessen's assertions that Cisco and Microsoft are undervalued, Fool analyst John Reeves notes that even well-established firms have found it impossible to keep up with changing times in the technology space.
What may be behind tech's uncertainty is simply the need for Intel, Microsoft, and Cisco to find customers willing to spend money. In a questionable economy, businesses and consumers alike prefer to put off making spending decisions. But when broad-based economic growth finally comes, then the pent-up demand could send tech companies soaring.
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