[4:40 PM] Apple Stock Watch: The Nasdaq Heads South, Drags Apple To 5th Straight Sell-Off
by Wes George
After seven rally days in a row the Nasdaq rested. Traders took profits and rotated out of the interest rate sensitive high techs and into commodity stocks and the blue chips, in what looked like ships heading for harbor before the storm.
Apple continued to sell-off for a fifth day, down 4 1/8 dollars to close at 94 7/8 on below average volume.
The Dow climbed 32 points (0.29%) to close at 11160. Volume was heavy with over a billion share traded ahead of Friday's expiration of futures contracts and options. Financial stocks slid hard today because of the rising bond yields.
The Nasdaq gave back 86.46 points (2.36%) to close at 3571.71 with 1.57 billion shares traded.
The Philadelphia Semiconductor Index (SOX) lost over 6% on fears that Y2K inventory stockpiling of electronic components will hurt future profits. Internet stocks also got hit hard, the Amex Internet Index (IIX) lost about 3.0%.
The S&P 500 lost 12.05 points (0.85%) to close at 1403.17.
53% of the stocks on the S&P 500 are down for the year, prompting John Bollinger of equitytrader.com to suggest on CNBC that we are in a "stealth bear" market. Outside of the technology and Internet related stocks, the broader market has been declining since late in last summer.
The bellwether 30-year Treasury bond got clobbered, down 1 8/32 to close at 97 21/32, while the yield rose to 6.30% from 6.16% on Friday.
Retail sales figures for November blew the doors off analysts projections, rising 0.9%. Apparel sales were up 0.9% after a weak 0.3% increase in October--attributed to the unusually warm fall season. US adjusted retail sales in the first two weeks of December rose 1.7%, that's a 4.2% increase over the same week last year.
The long bond responded negatively to the strong retail data on fears that it will weight in with the Federal Reserve as evidence that the economy is overheating, resulting in an interest rate hike in February. Stocks with high PE ratios have the most to loose from higher interest rates.
In spite of the stunning strength of retail sales, inflation remains muted. The consumer-price index (CPI), the primary indicator of inflation, ticked up only 0.1% in November. Economists had expected 0.2% increase. However, the core CPI, which excludes food and energy, prices rose 0.2% in November.
Over the last year, consumer prices have risen 2.6%, but if you exclude soaring energy costs the CPI is up only 2% for the year.
Compounding the interest rate and inflation fears is the US current account deficit with her foreign trading partners. The US trade deficit set a new record in the 3rd quarter expanding 11% to $89.95 billion, crushing the previous record set only last quarter of 80.91 billion. This trade gap illustrates the strength of hot US economy, while the rest of the world's economies remain relatively subdued.
In Apple related businesses Adobe managed to gain 7/16 to end at 60 5/8. Macromedia lost 2 3/16 to close at 81 7/8, while Symantec got crushed, down 4 5/16 to end at 54. Akamai was off 11 to close at 217.
Apple's Power PC partners, IBM and Motorola, ended off. IBM lost 7/16 to close at 109 1/4. Motorola saw some serious profit taking, down 9 11/16 to close at 118 7/8.
Apple's competitors also suffered today, Gateway was off 1/4 to close at 70 1/4. Hewlett Packard lost 4 5/8 to close at 103.
Dell shuffled it top executives yesterday in preparation for Morton Topfer's, Dell's vice-chairman expected retirement in 2001. Dell lost 11/16 to close at 41 1/16.
About 1:00 pm (EST) rumors that Microsoft made a settlement with the Justice Department caused the stock to soar more than 4 points to a new intraday high for Microsoft.
Microsoft ended the day up 2 1/16 to close at 98 11/16.
3Com (COMS) made it official today; they are spinning off the Palm Pilot unit as an IPO. Shareholders will get a stake in both companies. Motorola, Nokia, and AOL plan on taking a large stake in the Palm Pilot IPO, which is planned for February. 3Com shares rose 5 13/16 points to close at 50 5/8 on very heavy volume.
Oracle announces 2nd quarter earnings this afternoon, beating analysts expectations of $0.22 per share by $0.04. This recent quarter was forecast to be a tough one for Oracle due to the Y2K lock down on enterprise software purchases by big corporations. Oracle slid 2 1/8 to close at 76 15/16 during the regular market session, but was trading above 82 dollars in after hours trading.
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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