To quote one of the anchors from CNBC this morning, itis Fed Chairman Alan Greenspanis world, he just lets us play in it. That is in reference to the fact that the markets are waiting for the results of the current Fed meeting that began today. That body is expected to lower interest rates by 50 basis points (a half point), this on the heels of another 50 basis point decrease earlier this month. That is a very precipitous decline from a group known for its patient and slow guidance of the economy. However, that is not good enough for some folks, as todayis Consumer Confidence Index was so low, some folks started whispering about a 75 basis points decrease. The CCI showed the lowest levels of consumer confidence since the crashes of 1990 and 1993, and that lends credence to the idea that the Fed has to make another drastic cut in the rates. Where this will impact the markets the most is the issue of how much these expectations are already built into the markets.
When the markets expect an increase or decrease in interest rates, stock prices will usually move towards what investors think their new value will be once the change takes place. This means that the news will be "built in" to the stock price by the time the news actually happens. The same thing happens with earnings warnings and other guidance from corporations and analyst utterings. So with most of the movement in price taking place before any actual announcements (or actions in the case of the Fed), most stocks will only move after the announcement in the case of a surprise, either one way or the other. The bottom line is that tech stocks are not likely to increase or decrease after tomorrowis announcement unless the Fed lowers interest rates by more or less than 50 basis points. To make things even more confusing, there was more muttering among investors that even a 50 basis points decrease in the rates might lead to a sell-off, despite that news being "built in," as investors take the opportunity to lock in their profits. The tech sector (and the Nasdaq) have enjoyed some significant gains since the beginning of the year.
In addition to the Fed announcement tomorrow, Apple will be holding its semi-annual shareholder and analyst meeting. That event will be webcast, and we expect Apple to offer a clearer picture of the current quarter and the rest of the year. They should also be talking about how their current products are doing in terms of availability.
Apple closed slightly higher as most hardware stocks moved slightly lower. Apple closed at 21 3/4, up 1/16 (+0.29%) on strong volume of 12,364,500 shares trading hands.
The Nasdaq closed virtually unchanged at 2838.35, a gain of a penny (0.00%).
The Dow closed higher as blue chip stocks performed very well. The Dow closed at 10881.20, a gain of 179.01 (+1.67%).
The S&P 500 made it a family affair by closing at 1373.59, a gain of 9.42 (+0.69%).
Akamai has been all over the news for weeks now. Today, the Banc of America Securities initiated coverage of Akamai with a Buy rating. Despite this, the stock closed lower at 30 11/16, down 1 1/8 (-3.54%) on volume of 3,729,600 shares trading hands. Apple is a major shareholder of Akamai.
Adobe issued an earnings warning on the idea that a slowdown in the economy could impact their sales. In a word, duh! The stock was headed into negative territory after the bell. Before the bell (and before the announcements, the stock closed at 52 3/4, down 1 1/4 (-2.31%) on volume of 6,495,400 shares trading hands.
IBM has all kinds of announcements today, as behooves a company as huge as Big Blue. Most of it involved new partnerships, and other positive news, and the stock traded higher to close at 116.61, a gain of 1.63 (+1.42%) on volume of 8,242,000 shares trading hands.
Motorola closed at 23.01, a slight loss of 0.09 (-0.39%) on volume of 8,927,100 shares trading hands.
Earthlink announced better than expected results for the 4th quarter as the company lost some 40 cents a share instead of the expected 51 cents a share. This announcements took place after the bell, so Earthlink should be an active stock in morning trading. The stock closed at 8 7/16, a slight loss of 1/16 (-0.74%) on heavy volume of 2,599,800 shares trading hands.
Gateway closed lower at 20.98, a loss of 0.68 (-3.14%) on heavy volume of 5,847,100 shares trading hands.
Dell closed at 28 1/8, a loss of 5/16 (-1.10%) on volume of 39,993,400 shares trading hands.
Hewlett Packard joined Apple on the plus side to close at 37.80, a gain of 0.27 (+0.72%) on volume of 7,533,500 shares trading hands.
Intel closed at 37, another slight loss of 1/16 (-0.17%) on strong volume of 60,797,500 shares trading hands.
Microsoft also moved lower to close at 63 3/8, a loss of 1 1/8 (-1.74%) on light volume of 28,637,900 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 Appleis stock activity, visit our updated Apple Stock Watch Special Report.