Fed Stands Pat, Markets and AAPL Trend Higher

The Dow and Nasdaq climbed higher while the Federal Open Market Committee met, then held most of the gains after the FOMC announced that no change was made to the Fed Funds rate, which will remain at 6.50%. Appleis stock climbed over a dollar.

Data show rapidly advancing productivity gains continue to hold costs down, while growth in demand "is moderating toward a pace closer to the rate of growth of the economyis potential to produce," a Federal Reserve statement said. The productivity gains in the US economy are the result of increased rates of return on high technology capital spending. However, the Fed still sees future inflation risks in the form of rising labor costs and continued strong consumer demand.

The Wall Street Journal commented:

"Most economists believe that the Fed is also unlikely to raise rates at its October meeting since it occurs a month before the presidential election. The central bank traditionally prefers to lay low during the heat of presidential campaigns in an effort to avoid accusations that its policy decisions are being made to influence the election."

Apple continued to rally by 1 3/16 to close at 51 11/16 on high volume of 4.9 million shares.

Yesterday an ON24 audio news report predicted that Apple will trend to $75 per share later this year, because while Apple is growing at a rate comparable to its PC peers, Appleis P/E of 27 is about half the industry average of 56. The report also provides an overview of Appleis financial news since MACWORLD in July.

Meanwhile, MacCentral reported that, "DEAglobal, a group of analysts that provide online research... sees potential for shares of AAPL to reach their previous highs, of approximately $75, later this year."

The Nasdaq climbed higher for the seventh consecutive day by 5 points (0.13%) to close at 3958 on volume of 1.4 billion shares.

The Nasdaq is stuck at its 200-day moving average which happens to be just under the 4000 mark at 3959. But the Nasdaq is up 18% from May. The Philadelphia Semiconductor Index ($SOX) and the Biotech Index ($BTK) led the technology stocks higher today.

The Dow rallied 59 points (0.54%) to close at 11139 on volume of 819 million shares.

The Dow is in a steady, if creeping rally, up 600 points in August and climbing towards its highest level since April with the Nasdaq leading the way. A number of market observers think tech stocks are set to explode to the upside after Labor Day (September 1st).

The S&P 500 dropped 1.35 points (-0.09%) to close at 1498.13.

In Apple related businesses: Akamai fell 4 3/8 to 71 5/8. Motorola gained 1/4 to 36 1/4. IBM climbed 3/16 to 121 5/8. Earthlink fell 1/4 to 9 15/16.

Macromedia fell 11 5/8 to close at 66 3/8. Recently Macromediais stock has been battered down because of their legal wrangling with Adobe over patent issues. But todayis weakness had no obvious direct explanation. Adobe climbed 2 3/8 to close at 122 1/4.

Appleis competitors: Dell fell 1 1/4 to 37 1/2. Gateway was higher by a dollar to 63 1/4. . Shares of Microsoft climbed 17/32 to 71 5/32. Hewlett Packard climbed 2 3/16 to 113 3/16.

Sun Microsystems rose 9/16 to 122 3/16. Intelis CEO, Craig Barrett, joked that Sunis business model is doom. According to CNET News Barrett said,

"Sun, which designs the hardware, software and processors that go into its servers, represents an increasingly outmoded way of doing business because it locks corporate customers into products or services from a single seller, Barrett said. By contrast, the "horizontal" PC market, where different companies sell interchangeable products based on common standards, lets customers shop around and will emerge victorious."

The article quotes Mr. Barrett as saying, "If the vertical market was successful, Apple would have 95 percent of the market rather than 4 percent." Intel climbed 7/16 to 72 1/2.

Compaq was the most active stock on the NYSE today as it broke out for a new 52-week high. Compaq climbed 13/16 to close at 34 dollars.

In Economic News: On Thursday, look for Julyis Durable Goods Orders which are expected to decline substantial from Juneis 9.7% increase to -0.5%, indicating weakening consumer demand. Friday, expect the Gross Domestic Product revision for the second quarter, itis expected to give back a bit to 5.1% from 5.2%.

The Mac Observer Stock Watch Virtual Portfolio lost some ground today.

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.

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