Stock market turmoil leads to tech confusion

The last few months have produced more clouds than silver linings for almost every U.S. economic sector. In October the S&P 500-stock index fell just over 18 percent, according to Standard & Poor's Equity Research, making it the third-worst October in 79 years.

November typically begins the strongest six-month stretch of performance for the stock market, says the S&P's Sam Stovall in a BusinessWeek.com article. Although most of November continued like October's roller coaster ride, some breakthroughs this week appear to be bringing stability to the market. Thanks to President-elect Obama's appointment of an economic team and the government's lifeline to Citigroup, things are looking up heading into the holiday season.

The IT sector is seeing a boost along with the other sectors. Shares of telecommunications companies soared Monday as the broader market rallied. The telecom sector looked especially strong with experts predicting riskier companies like Sprint Nextel Corp., Qwest Communications International Inc. and Clearwire to outperform the market.

"Riskier [telecom] names have gotten beaten down more so than most of the other telecom names over the last several months," said Stifel Nicolaus analyst Christopher King in an interview with the Associated Press. "Today, people are presumably more comfortable with risk."

Movement on Wall Street this week has some optimistic after recent evidence of tightening IT budgets and layoffs at major technology companies cast doubt on the sector's resilience through a recession. The CIO Executive Board shows that more than half of CIOs have put nonessential projects on hold, and 61 percent are re-evaluating their 2009 budgets. Rumors are swirling that even Google may be preparing to lay off thousands of workers.

IT spending will drop next year as a direct result of the global economy, according to analyst firm IDC. The company slashed growth projections to less than half of its earlier predictions. Almost instantaneously, chip giant Intel Corp cut its fourth-quarter sales projection. Following this prognosis from IDC in mid-November, shares of computer makers Dell and Hewlett-Packard dropped. 

In all, there's very little comfort in the recent success of the stock market, and particularly the IT sector. The economic situation is still largely uncertain.

For more on technology stocks read these articles from FierceCIO:

• 2007 was a good year for tech stocks
• Microsoft stock dips whenever a patch is released
• AMD Shanghai launched ahead of schedule, stock reacts
• Startups feel the squeeze