[4:00 PM] Apple Stock Watch: The Nasdaq Nears Correction Territory, while Apple Bounces Off Low
by Wes George
The Nasdaq tumbled lower while the Dow laggards came to life, soaring higher in a heroic effort to lessen the divergence between the indices. Investors shaved profits off the highest flying tech stocks and pour them into value stocks with modest price-to-earnings ratios. Apple, a rare New Economy stock with value, climbed above yesterday's lows.
The general theme today was buy beaten down stocks, whether they're biotechs or old economy standards.
Apple gained 2 dollars or 1.75% to close at 116 1/4 on 3.9 million shares trading hands.
The Nasdaq sank 123 points (2.62%), after yesterday's 200 point decline, to close at 4583.39 on 1.9 billion shares traded. The Nasdaq is down almost 10% from its high, set just last Thursday, setting us up for the third "correction" of more than 10% in 2000 so far. The biotech stocks lost over 10% yesterday, but bounced back 4% today, while Internet, software and computer hardware stocks were mostly lower. The Philadelphia Semiconductor Index (SOX) was down over 2.3%.
The Dow soared 320 points (3.26%), to close at 10131 on volume 1.2 billion shares. The old economy rally was broad, airline were up 8%, drugs stocks climbed 6.8%, retail stocks were up 7.4%, while consumer stocks, banks, and transportation stocks all saw their best one day gains in over a year.
The S&P 500 climbed 33.12 (2.44%) to close at 1392.27.
In Apple related businesses: Adobe was up 2 1/8 to close at 83 9/16. Adobe announces earnings on Thursday after the bell. Akamai lost 29 1/4 to close at 240 1/4. ARM Holdings lost 12 1/8 to close at 198. Earthlink gave back 1 1/4 to close at 20 15/16. Macromedia sank 9 7/8 to 83 5/8. Motorola lost 10 5/16 to close at 150 7/8. IBM lost 2 1/8 to close at 106 1/2.
Apple's competitors: Gateway slipped 2 1/16 to 58 dollars. Compaq lost 5/16 to close at 29 11/16. Hewlett Packard lost 8 7/8 to close at 130 7/8. Shares of Microsoft gained 1/4 to close at 95 3/8. Dell gave back 2 1/4 to 53 11/16. Intel gained 2 5/16 to close at 120 3/16.
Economic data in the news: The current-account balance, a broad measure of international trade, showed a record quarterly deficit of $99.78 billion for the last quarter of 1999, ending the worst year on record. The deficit climbed 53.7% from $220 billion to $339 billion in 1999. Economists had forecast the deficit to be $95 billion in the last quarter.
Now for the good news: Industrial production in the US increased at 0.3% last month, less than the predicted 0.5% boost. Year over year, industrial production increased by 5.6% last month.
The Wall Street Journal reported, "Operating capacity was 81.7% in February, the same as the month before and slightly less than the 81.6% economists had expected. Capacity was below levels usually associatedwith a pickup in inflation. Generally, an operating capacity of 84% would alarm economists, indicating that factories just can't produce fast enough -- which could lead to price increases."
Tomorrow morning watch for the producer price index (PPI) which could have a strong effect on the market direction. Friday, the consumer price index (CPI) is released. Wall Street will be watching closely for any acceleration in the PPI and the core CPI signalling the onset of inflation.
Next week, on March 21st, the FOMC (Federal Open-Market Committee) meets. Most observers believe that they'll decide to tighten credit by raising the Fed Fund rate a quarter point from 5.75% to 6.00% in a further effort to slow economic growth.
The bellwether 30-year US Treasury bond traded up 7/32 to 101 8/32. The yield, which moves inversely to the price, rose to 6.15% from 6.19% yesterday.
For full quotes on all the companies mentioned in this article, we have assembled this set of quotes at Yahoo! for your reference. We also have many of these same quotes reported live (20 minute delay) on our home page. For other stories regarding Apple's stock activity, visit our Apple Stock Watch Special Report.
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