Tech Stocks Take It On The Chin As Market Continues To Freefall

It’s a blood bath out there this morning. The S&P 500 is at a four-year low as the credit crisis keeps getting worse, despite the passage of the government’s $700 billion bailout plan. The market is taking tech stocks down with it. Google is down 4 percent to $368, its lowest point since 2006. Apple is down 6 percent to $91. Microsoft is down nearly 5 percent to $25. Amazon, Yahoo, eBay—all down.

Fears of a credit freeze are growing as the contagion spread to banks in Europe. The Fed is already flooding the market with more cash through new powers it was granted in the bailout package. All of this makes you wonder if A) the U.S. government acted fast enough and B) whether the bailout package is going to end up doing any good.

As far as tech stocks are concerned, already as I write this, there seems to be somewhat of a rally going on in some of these stocks (particularly Google) from the lows where they opened. But if the economy falters, tech stocks won’t be a safe haven for investors, even if they are cash-rich and not as exposed to the credit debacle as companies in other sectors. The markets always tend to overreact to systemic risk because nobody knows how far the problems are going to spread. What we are seeing is panic in the face of the unknown. It reminds me of the market panic after 9/11. Investors whop loaded up on tech stocks then ended up making a lot of money.

Does this signal a buying opportunity, or are investors better off running for the hills? Who is buying (or selling) what out there? Tell us in comments.