There is some debate about what is, and isn't, a bellwether stock. The term is certainly used loosely to describe any big company -- but more importantly, it is usually used to describe companies that shed some light on the direction of the economy. FedEx Corp. is often called a bellwether because some view its fortunes as a harbinger of global economic growth, since shipping packages around the world reflects consumer spending and trade activity.

Many observers dispute this, though, arguing that FedEx earnings and economic growth are not actually closely correlated. However, based on Thursday's stock market activity, it is hard to dispute Cisco Systems Inc. as a bellwether for the technology sector - if for no other reason than the stock has a massive influence on other tech shares.

Cisco shares fell hard on Thursday, a day after the company issued a disappointing sales forecast for its fiscal second quarter. While analysts had been expecting revenue growth of 13 per cent during the quarter, Cisco said it would come in somewhere between 3 per cent and 5 per cent. For the full year, Cisco sees growth of 9 per cent to 12 per cent, also below expectations for 13 per cent growth. Part of the problem is due to cutbacks in government spending, which represents a substantial chunk of Cisco's market.

With the shares down about 16 per cent in afternoon trading on Thursday, the stock's price in Canadian dollars - always important to Canadian investors - is not far from its low during the 2008 to 2009 bear market.

But back to the stock's bellwether quality: Cisco's one-day plunge has dragged down a vast number of other technology stocks, and not just those of competing companies. For example, Hewlett-Packard Co. fell 2.8 per cent, Microsoft Corp. fell 1.1 per cent and Dell Inc. fell 4.6 per cent. Okay, the size of these downturns might not rival Cisco's dip, but the direction is the same.