Updated from 2:32 p.m. EDT

The stock market tumbled Thursday as traders fixated on the negative implications of falling crude: a slowing global economy.

Update: In the worst decline since June 6, the Dow fell 345 points, or 3%, to 11,188. The S&P lost 3% to 1237 and the Nasdaq fell 3.2% to 2259.

The decline was significant and suggests the S&P will break 1200 before long, says John Roque, senior technical analyst at Natixis Bleichroeder. After being "tremendously oversold" in mid-July, with an accompanying, historic spike in new lows "you shoulda rallied good," Roque said.
"We didn't. [The S&P] couldn't get through 1300. That's bad."

Thursday's surge in weekly jobless claims and weak same-store sales data were cited as the primary catalysts for the slide -- and strength at discounters like Wal-Mart is evidence of a struggling consumer, not a strong one.

Adding to the anxiety, Pimco's Bill Gross is warning about the potential for a "financial tsunami" if the U.S. government doesn't do much more to bail out both lenders and borrowers alike: "If we are to prevent a continuing asset and debt liquidation of near historic proportions, we will require policies that open up the balance sheet of the U.S. Treasury -- not only to Freddie and Fannie but to Mom and Pop on Main Street U.S.A., via subsidized home loans issued by the FHA and other government institutions," Gross writes.

In addition, a series of other developments in recent days have offset stronger-than-expected reports on ISM services, productivity and factors orders, as well as last week's GDP report, including:

• The ECB's downgrade of growth expectations, and a rate cut by the Australian central bank.
• Warnings from Corning and Ciena about slowing spending, and cautious comments about the cell phone market from Qualcomm's CEO.
• Terex's warning about waning demand for construction equipment from Europe and the U.S.
• Sluggish auto sales, most notably from Ford while GM's 49% owned financing unit, GMAC, slashed workers and announced cutbacks on mortgage lending.
• Snags in Lehman Brothers talks with the Korean Development Bank (KDB) over both price and KDB's potential partners in a consortium.

Given all that, on the heels of last week's cautious comments from Dell, Toyota, Diageo, and others, and it's no surprise traders are coalescing around the "slowing global economy" theme.

Typically reporters have the regular weeks of run up to Apple's World Wide Developers Conference or MacWorld to speculate on exactly what wonder device Steve Jobs will unveil. But Apple has sprung an event on us next Tuesday called "Rock On." It's not a stretch to think it's iPod themed and indeed some schematics of new iPod Nanos and Touches have been making the rounds. ZDNet has a catalog of past iPod announcements and the current speculation here. As the post notes, well known Apple fan boy and Digg co-founder Kevin Rose in increasingly making predictions that include iTunes software updates as well. One example is a program called "Genius" that puts together playlists for you of like-songs.

So what's a stake for Apple? As Kevin Maney of Portfolio points out Apple has been so dominant that it's growth of the music market is slowing. He goes so far as to say the Zune and a forthcoming competitor by Dell are threats, but I'll frankly believe that when I see it.

The bigger question is whether Apple has stolen its own iPod thunder with the iPhone-- complete with an app store that supports a free version of wildly popular Internet radio site Pandora.

One thing is for sure: Given all the recent health rumors, articles and Bloomberg's premature obituary leak, all investors will be eyeing not only what Steve Jobs says, but how he looks.

From All Things Digital, Aug. 29, 2008:

If you’re the owner of an iPhone 3G and you haven’t already updated to the iPhone 2.0.2 firmware, do so today–for your sake and that of all iPhone 3G owners.

Why?

Well, according to sources at AT&T (T), the reception problems that have plagued the device won’t be resolved until you do. iPhone’s running 2.0 or 2.0.1 firmware mistakenly demand too much power from 3G networks. And when they do this en masse, they can cause the network to refuse new requests for 3G bandwidth. That in turn causes the reception issues we’ve been hearing about since the device first arrived at market in July. And those issues will persist as long as handsets running iPhone 2.0 and 2.0.1 continue to strain the 3G networks.

That’s the story, anyway. And it does sound plausible. Although, you’ve got to wonder why this issue is specific to the iPhone. Presumably, there’s a multitude of other 3G devices out in the world requesting a 3G signal from the same networks the Apple (AAPL) iPhone is overwhelming. Why aren’t they suffering similar problems?

As consumers start to understand the ramifications of ISPs monkeying with their Web access, a blog-driven grassroots movement has turned Net Neutrality into a populist issue. Most major democratic Senate candidates have come out in support, and Barack Obama has assured voters it's something he'll actively pursue. That's one of the reasons techies have supported him.

Former Google executive and angel investor Chris Sacca notes the pro-Net Neutrality rhetoric is even starting to cross the aisle, as seen with this month's bi-partisan FCC decision that Comcast was unfairly routing traffic to customers. In the second part of our interview on Net Neutrality, Sacca and I discuss where the Net Neutrality battle lines are being drawn, and what voters can expect after November.

For the first part of my discussion with Sacca, click here.

Cisco shares jumped Wednesday as traders embraced the company's fiscal fourth-quarter results and better-than-feared comments from CEO John Chambers.

On the company's conference call, Chambers noted signs of recovery in the U.S. enterprise market and reiterated his "very strong" confidence in the firm's long-term revenue growth target of 12% to 17%. He also said the current slowdown is a "relatively short-term challenge."

But the bottom line is the top line in this case: Cisco only gave guidance for the first half of its fiscal year, and that guidance -- for 8% year-over-year sales growth in Q1 and 8.5% in Q2 -- was below expectations and well below its long-term goal.

Given the broader macro trends and Cisco's recent history, Henry Blodget says it's wise to "apply healthy skepticism" to those forecasts.

Skepticism was in short supply Wednesday, although traders may also be embracing Chambers' comments on CNBC about Cisco's not having "any negotiations with any large companies at this time."

EMC, often rumored to be a Cisco buyout target, was recently down about 3%.

Cisco may be one of the last tech bellwethers to provide results for this earnings cycle, but it was the first to sound the alarm bell about the ongoing slowdown.

It was last November, you may recall, when Cisco's John Chambers talked about "softness" in the U.S. enterprise market and said the financial services segment was looking "lumpy."

In hindsight, Chambers' comments marked the top of the Nasdaq's multi-year rally and the beginning of the bear market.

The broader market is rallying fast and furious on Tuesday, but don't expect Chambers to offer a rosy scenario after the close tonight. About a month ago, he said there's likely no recovery in IT spending until 2009, and one (or even two or three) days of market gains is unlikely to change that view.

From All Things Digital, July 30, 2008:

For all the hype about “social networking” Web sites, the most popular and successful way to network over the Internet is still the oldest: email. If it’s organized properly, boring old email can reveal as much or more information about the people you know, and their relationships with you, than hipper services like MySpace or Facebook.

This is especially true if you are the kind of person who saves most of his or her email. That mound of messages can be a treasure trove of contact information and a history of your interactions with hundreds, or thousands, of personal and business acquaintances. It can tell you the phone numbers and job titles of people, and even who you and your correspondents most often copy on email. It’s a sort of social network all its own.

The trouble is, it’s hard to tease all that information out of the typical email program. And that goes double for the most popular, but most bloated and dense, email program of all, Microsoft Outlook.

Now, however, there’s a new, free plug-in module for Outlook that adds a set of social-networking and data-mining features right inside the venerable program. This new plug-in for Outlook is called Xobni, which is “inbox” spelled backward and is pronounced “ZOB-nee.” It is completely contained in a colorful vertical panel that lives on the right side of your Outlook screen and doesn’t block or intrude upon Outlook’s own panes or functions.