The last time stocks crashed in a big way, the major cause was the misguided belief of tech investors and entrepreneurs that they were immune to the mundane laws of economics. Valuations lost a link to reality and the investment frenzy set up the famed dot-com crash that plunged the U.S. into a mini-recession.

This time, technology stocks can’t be blamed for the market meltdown, which is largely due to the sub-prime credit crunch and the growing panic over a possible recession. In fact, unlike 2001, when the money dried up, signs are that venture investors have more money than they know what to do with. The bigger question is how much the slowdown will affect the ìnvestment market.

The Dow index dropped a whopping 465 points Tuesday before bouncing back to close down 128.11, or just over 1 percent lower. Most analysts attributed the comeback to the U.S. Federal Reserve’s surprise three-quarters percent cut in its prime rate early Tuesday morning, a move that acknowledged the global economy was on the brink of another downturn. The Nasdaq, where most tech stocks are located, didn’t fare as well, dropping 2`percent of its value, but still half of its own early morning plunge.

In a brief statement, the Fed said it had decided to cut its lending rate to banks "in view of a weakening of the economic outlook and increasing downside risks to growth." The last time the Fed dropped rates before its scheduled meeting was after the Sept.11, 2001, attacks.

Investors will now look to Asian markets and how they respond to the U.S. rebound. They sank sharply Tuesday, shattering the myth that emerging economic giants like China and India had enabled fast-growing economies to “de-couple” from the U.S. Hong Kong’s Heng Seng index fell 8.65 percent; Shanghai’s Composite dropped 7.22 percent while the Seoul composite lost 4.43 percent of its value. Tokyo’s Nikkei dropped 5.65 percent, setting off fears that Japan was heading into yet another recession. European stocks staged a rally Tuesday, with the FTSE and France’s CAC actually moving into positive territory on news of the Fed’s rate cut.

U.S. tech stocks fared worse than the market indices on Tuesday with eBay, Logitech, Yahoo, and Ericsson all shaving 4 percent or more off their value. Among the old-line tech stalwarts Microsoft declined more than 3 percent while Hewlett-Packard slid 2 percent. Even Google, the golden child of tech over the last year, gave up 2.65 percent of its value`to close at $584.35. Apple reported earnings after the close and despite crowing about record performance was punished for the company's pessimistic guidance for its next quarter.

The stock markets’ freefall comes as the U.S. startup sector was celebrating its best performance since 2001. Just last week, the Money Tree Report by Price Waterhouse and the National Venture Capital Association reported that venture capitalists had poured $29.4 billion in new U.S. tech companies in 2007, an 11 percent increase over 2006, with much of it going into clean tech and life sciences. By contrast, European venture capitalists tightened their purse strings in 2007, putting 5.27 billion euros into startups, down from 5.64 billion in 2007.