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Good Economic Data Rallies Stocks, Apple Up 6%

Apple Stock Watch - Good Economic Data Rallies Stocks, Apple Up 6%

by , 7:00 PM EDT, April 27th, 2001

The markets went into rally mode today. The Dow, the Nasdaq, and the S&P all registered gains today, though there wasn't much conviction registered by the lower than average volume. Pushing today's gains was unexpected good economic data that indicated that 1st quarter GDP (Gross Domestic Product) grew at an annual rate of 2%, far ahead of the 1.1% that had been forecast. Consumer sales rocked, home sales were kickin' it "old school," and the grand prognosis is that we aren't in a recession after all. Pardon us while we are not surprised. [Note to Cisco: You can't use the "R" excuse any more in your earnings report.] Before you start pouring the bubbly, some analysts are still clinging to poor consumer confidence numbers for April which raise doubts on whether or not the 2nd quarter could be a repeat performer. Apparently forgotten is the fact that those numbers were gathered just before a surprise cut in interest rates from the Fed which is largely felt to have buoyed consumer confidence. Additional rate cuts are not being ruled out because of the good data, however. According to a CBS Marketwatch report:

The strong data are "clearly not good for those looking for a sub-4-percent Fed funds [interest rate], but [the numbers] won't prevent modest, further easing," said Ian Shepherdson, chief U.S. economist with High Frequency Economics in Valhalla, N.Y. "The Fed is still scared about Q2-Q3."

Sounds good to us. Please note that these numbers may be revised in coming weeks, meaning that our wise-cracking comments may be out of line when all is said done. On the other hand, Fed Chairman Alan Greenspan said today that productivity growths will continue in coming years. In addition, he says that he feels confident that the US can pay off its massive debt with forecast budget surpluses. This is seen as good news for continued growth. From a Reuters report:

"While the magnitudes of future federal unified budget surpluses are uncertain, they are highly likely to remain sizable for some time," the central bank chief told the annual convention of The Bond Market Association. "Current forecasts suggest that under a reasonably wide range of possible tax and spending policies, the resulting surpluses will allow the Treasury debt held by the public to be paid off," Greenspan said.

"I am confident that U.S. financial markets, which are the most innovative and efficient in the world, can readily adapt to a paydown of Treasury debt by creating private alternatives with many of the attributes that market participants value in Treasury securities," he said.

Not only does that suggest that our wise cracks will stand the test of time, it also added fuel to today's rally.

After hammering on IBM's recent stupidity concerning their sidewalk vandalism graffiti spree in San Francisco and Chicago, we thought we would give them some good press. The company has announced an initiative to make computers that repair themselves. The company also has announced an even cooler technology that allows them to make semi-conductors out of tubes of rolled up carbons. We don't understand it either, but it will mean some extraordinary advances in computing as we know it, assuming the technology makes it to market in some fashion or another. It will reportedly take at least 10 years for that to happen. Perhaps they will advertise the new technology by putting bumper stickers on your cars while you are shopping.

Microsoft will be late to market with Windows XP according to a report with Giga Information Group (GIG). Rob Enderle, an analyst with GIG says that Microsoft is going to release Windows XP in October instead of August. The only problem with that is that Microsoft has never announced a final shipping date for their NeXT generation Mac rip off, instead targeting the 2nd half of the year. The company has replied to questions about this issue by saying the software will be released when it is ready, and that a specific target date has not been set. An analyst on CNBC (whose name we did not catch) said that while GIG has adjusted their own predictions, they are actually falling more in line with everyone else who expected the OS later in the year to begin with. The significance of this is that PC hardware sales for the 2nd half of 2001 could well hinge on the release of Windows XP. Microsoft traded lower on the reports, though PC hardware makers traded higher.

Matthew Rothenberg has weighed in with his thoughts on what Apple will be announcing on Tuesday, May 1st. The Cupertino, California company has announced a press event on that day. Mr. Rothenberg says that he expects Apple to announce their new retail stores on that day and that they will stock them with new iBook models. It's a good read, and is recommended.

Apple gained more than 6% today in average volume. AAPL opened up the day some 30 cents in positive territory, and stayed there all day. The stock chugged long in the morning and early afternoon session, and then took off in the last hour of trading to close just off the day's highs. The day's range was 24.75 - 26.29.

Apple closed at 26.20, up 1.51 (+6.12%), on volume of 8,306,800 shares trading hands.

The Nasdaq closed at 2075.68, up 40.80 (+2.01%), on volume of 1,802,146,000 shares trading hands.

The Dow closed at 10810.05, a gain of 117.70 (+1.10%), on volume of 1,090,666,000 shares trading hands.

The S&P 500 closed at 1253.05, a gain of 18.53 (+1.50%).

Akamai regained more than 13% of the 24.24% loss the stock has suffered in the last two days. AKAM closed at 7.91, up 0.91 (+13.00%), on light volume of 2,132,400 shares trading hands. Apple is a large shareholder of Akamai.

Adobe announced a press conference for their March quarter financials on May 1st. The company will be Webcasting the event as well. ADBE closed at 45.62, up 0.95 (+2.13%), on very light volume of 2,736,500 shares trading hands.

IBM won a fat US$1.3 billion contract to rebuild the US Customs computer system. We have additional commentary at Mac OS News Around The Web today about IBM's sidewalk vandalism Linux ad campaign. IBM closed at 116.20, up 2.46 (+2.16%), on light volume of 7,400,400 shares trading hands.

Motorola closed at 15.49, a gain of 0.89 (+6.10%), on light volume of 8,551,500 shares trading hands.

Earthlink closed at 11.10, up a nickel (+0.45%), on light volume of 954,600 shares trading hands.

Gateway closed at 19.50, a gain of 0.75 (+4.00%), on light volume of 2,571,800 shares trading hands.

Dell closed at 26, up 0.68 (+2.69%), on strong volume of 39,145,000 shares trading hands.

Intel closed at 30.18, up 1.54 (+5.38%), on light volume of 42,843,300 shares trading hands.

Microsoft closed at 67.12, down 2.01 (-2.91%), on strong volume of 63,668,300 shares trading hands.

For full quotes on all the companies mentioned in this article, we have assembled this set of quotes at Yahoo! for your reference. For other stories regarding Apple's stock activity, visit our updated Apple Stock Watch Special Report. You can also check out our Apple Financial Boards, a new moderated forum for Apple Investors and people who are interested in Apple's financial dealings.

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