Apple’s Stock Starts a Rebound

Tech stocks tried to rally today, but the real theme was a search for a reason to move higher. A heavy news event day outside the markets distracted tradersi focus. Appleis stock moved off yesterdayis lows. However, the forecast slowdown for the PC sector moderated AAPLis comeback.

Apple climbed 1 3/8 or 2.82% to close at 50 1/16 on volume of 3.77 million shares trading hands.

Investors reevaluating their AAPL investment in light of the announcements at MACWORLD account for much of the recent weakness in Appleis stock. Apple is thinking quite differently about the future as compared to the, by now, conventional wisdom of the beyond-the-box strategies the other PC vendors have articulated.

See Steve Jobis Q&A session excerpts in this weekis Apple Trader column for some insight into Appleis strategy going forward.

Apple repurchased slightly over 1 million shares of AAPL last quarter at an average price of $48.47 per share. $334 million remains in the stock repurchase plan. Interestingly, $48 appears to continue as a support level for AAPL.

The Nasdaq regained about half of yesterdayis loss, rising 47 points (1.20%) to closed at 4029 on volume of 1.4 billion shares.

Merrill Lynch Chief Market Analyst, Richard McCabe, appeared on CNBC to say he isnit pleased with the marketis lack of response to the relatively strong earnings season. He forecast a downturn later this summer through the November elections, perhaps to retest of the lows established in April and May.

Mr. McCabe also makes an interesting historical observation. When the stock marketsi aggregate opinion is for the incumbent political party to win the US presidential elections in November, the stock markets have historical climbed higher in sympathy. Investors love the lack of uncertainty a stable government in Washington exudes, regardless of whether itis a Democrat or Republican administration. Likewise, when the stock markets feel the out-of-power party will win, the markets cautiously pull back from the unknown variable of the transition ahead. Mr. McCabe believes the equity markets are indicating George Bush as the next US President . Finally, he points out the markets have a better track record than the pollsters do in predicting elections this far in advance.

The Dow climbed 14 points (0.14%) to close at 10699 on volume of 966 million shares.

The S&P 500 climbed 10.18 points (0.70%) to close at 1474.47.

Akamai slid 22 7/8 to 85 dollars. The Apple Stock Watch Virtual portfolio, an imaginary trading account, bought 50 share of AKAM this morning at $90.3/4. But we probably wouldnit have done so, if we had known that Akamai was leaving the IPO venture capitalist lock-up period in August and September. While we still believe in Akamaiis streaming media business model over the long term, better accumulation points for the stock may arise simply due to supply and demand issues related to the end of the stock lock-up period.

According to Reuters, "The lock-up period for 2.8 million shares held by Akamaiis top executives, directors and other principal shareholders expires Aug. 1. A larger sell-off could happen Sept. 13, when a lock-up period for 58.2 million shares held by top managers and venture capital investors expires."

In Apple related businesses: Adobe gained 1 11/16 to 126 7/8. Earthlink climbed 5/16 to 15 dollars. Motorola gained 1 1/4 to 37 9/16. IBM lost 3/4 to 111 3/4.

Appleis competitors: Hewlett Packard shed 3 7/16 to close at 115 3/8. Gateway was higher by 1 3/4 to 60 3/8. Intel was higher by 2 7/8 to 140 7/8.

Compaq gained 1/2 to close at 27 7/16. Compaq managed to meet Wall Streetis expectation for $0.21 per share in second quarter earnings. Sales in the quarter were up from $9.4 billion a year ago to 10.1 billion last quarter.

Shares of Microsoft dropped 1 9/16 to 69 dollars on the news that Redmondis lawyers asked "the Supreme Court to let a lower tribunal hear the companyis appeal of antitrust violations first, a strategy aimed at avoiding a verdict to split the software giant."

In economic news: Consumer confident swung back sharply after a big decline in June, indicating US consumers believe their economic condition is improving.

Meanwhile, existing home sales climbed in July by 2.8% to the highest level in ten months.

Both indicators suggest the economy is not cooling as fast as economists had predicted it would in response to the last year of interest rate hike by the Federal Reserve.

Fed Chairman, Alan Greenspan, sounded reassuring in his testimony before Congress today, which was really just an elaboration on the speech he gave to the Senate last week. He gave no hint as to which way the Federal Open Market Committee (FOMC) might go with interest rates when it meets again in August.

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 Apple Stock Watch Special Report. </body>

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