[4:30 PM] Apple Stock Watch: Down Day For Apple, Thanks To Compaq!
by Wes George
Today didn't start well on Wall Street and then got worse, at least for the so-called "box makers." Salomon Smith Barney, in an unusually strong move, downgraded Compaq and lowered its price target from $45 to $25, three bucks below where CPQ began the day. Naturally, the whole hardware sector got whacked as fickle investors practiced shoot-first-ask-questions-later portfolio management. Apple gave back some recent gains.
In fact, Apple stock had bottomed out and was on the mend when the Compaq downgrade news broke sending AAPL tumbling 2 dollars in half an hour.
An earnings warning from Unisys didn't help matters in the various tech sectors either.
Meanwhile, the economy was pushed to an upwardly revised annual growth rate of 5.5% in the first quarter by consumer spending which surged 7.7%, also revised up from an earlier tally of 5.9% previously reported.
The Wall Street Journal reported, "The chain index for personal consumption expenditures -- a measure of price pressures on the economy that is closely watched by Fed Chairman Alan Greenspan -- jumped 3.5% in the first quarter, the sharpest gain since the third quarter of 1994. The 3.5% gain represents an upward revision from the 3.2% advance previously reported. In the fourth quarter, the inflation gauge grew 2.3%. "It's not good news, but I don't think it's alarming," said William Cheney, an economist with John Hancock, pointing to the effects of energy and food prices."
Apple lost 3 1/8 or 5.74% to close at 51 5/16 on volume of 3.6 million shares.
Late in the day rumors of a new iMac, which have been making the rounds for weeks in Mac journals and on message boards, finally broke into the mainstream technology press when C-Net News.com reported that Apple," is apparently clearing out inventories of iMacs and encouraging dealers to get rid of stock on hand, a sign that new models are on the way. More special iMac bundles are being advertised than in the past. Prices have also dropped in certain locations."
The Nasdaq fell 63 points (1.60%) to closed at 3877 on volume of 1.5 billion shares. The IPO (initial public offerings) market which earlier in the week was looking stronger bombed today as 3 out 5 technology IPOs closed below their opening price. Semiconductors stocks have been falling all week and today was no different.
The Dow fell 128 points (-1.22%) to close at 10399 on strong volume of 1.1 million shares.
The technical analysis forecasts for the Dow Jones Industrial Average are not a pretty picture. In fact, one could make a case from the narrowing trading range of lower highs and slightly higher lows that the Dow is forming a pattern known to chartists as a diamond top, which is real just a subset of the head-and-shoulder chart formation. Some chartists are expecting the Dow to break to the south any day now. Support for the Dow, in the case of a downtrend, doesn't exists until the 9500-9200 range. The implication of such a fall on the Dow has for the Nasdaq isn't entirely clear, in part because the Nasdaq chart shows a more positive, if range bound, trend.
The S&P 500 dropped 12.43 points (-0.85%) to close at 1442.39.
In Apple related businesses: Adobe traded down 9/16 to close at 124 1/4. Earthlink traded flat at 14 14/16. Motorola lost 7/8 to close at 29 1/4. IBM shed 1/32 to 113 3/4.
Apple's competitors: Hewlett Packard lost 4 1/4 to close at 119 3/4. Gateway lost 3 dollars to close at 55 5/8. Shares of Microsoft fell 1 3/4 to 77 3/16. Intel gave back 5/8 to 131 3/4.
Compaq fell 3 1/2 to close at 25 dollars after the shocking late afternoon downgrade by Solomon. Compaq, in an unusually move, replied that it has low inventory in the channels contrary to the Salomon Smith Barney report which claimed that the company has the highest inventory levels in the industry.
The Mac Observer Stock Watch Virtual Portfolio trended lower today.
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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