|Apple retreated today after a report to the Congress from Fed Chairman, Alan Greenspan, hints that a rate hike in the interest rate is likely. According to a Reuters report:
Since the Fed raised interest rates last month in a bid to stave off inflation, stocks have rallied to new records, helped along by strong corporate earnings. Today, Greenspan was not expected to offer any hints of further rate increases, as recent economic barometers have shown virtually no signs of inflation.
But he told Congress that while 1999 has been an exceptional year for the American economy, the central bank remains poised to fight any inflationary pressures.
Greenspan's testimony "left little doubt that he is nervous about inflation risks in the United States," said Michael Moran, chief economist at Daiwa Securities America Inc. in New York.
Perhaps more threatening to markets, Greenspan said he remains worried about the high valuations of US stocks in light of the continued growth of the economy.
As many tech stocks closed down, including all of Apple's PC competitors, Apple closed at 52 3/8, a loss of 1 11/16 or 3.12%. Volume was moderate with 3,630,000 shares trading hands.
IBM, Dell, Hewlett-Packard, Gateway 2000, and Compaq all fell as well with Hewlett-Packard showing the highest loss among stocks tracked by the Dow.
The Dow closed at 10969.22, down 33.56, while the Nasdaq closed at 2684.44, a loss of 77.33.
The Mac Observer Spin: With Internet companies that have never shown a profit having a market cap of billions, it is no wonder Chairman Greenspan is concerned about insupportable stock prices. At the same time, Apple, a profitable and healthy company with profits likely to exceed 3/4 of a billion dollars languishes with a P/E ratio of 14.65. At some point, the market must again reflect reality. :-)
Let's hope that Apple becomes a shelter for investors looking for real companies in which to keep their money.