The economy took center stage on Wednesday as the Commerce Department reported weaker than expected growth in the nationis Gross Domestic Product (GDP) for the second calendar quarter. The nationis GDP grew at a slow 1.1 percent pace during the three-month period rather than a growth rate of more than 2 percent that most economists expected.
Further, the growth rate for the first calendar quarter was revised downward from 6.1 percent to 5 percent. When the preliminary first quarter numbers were announced months ago analysts cautioned that the fast growth rate represented a build up of inventories. Working through inventories may have accounted for much of the drop-off in the second quarter growth rate. The Commerce Department also stated that GDP declined for the first three quarters of 2001 evidencing that the recession was deeper and lasted longer than previously believed.
Wednesday Morning Activity
With the Commerce Departmentis numbers clearly on their minds, investors cautiously approached the market Wednesday morning. The major indexes moved down from the start of trading and languished in negative territory throughout the morning. Disappointing news from graphics chip maker Nvidia Corp. kept pressure on technology stocks. Nvidia watched its stock drop more than 30 percent in value on Wednesday after lowering its outlook for the current quarter. Nvidia is faced with higher competition, lower selling prices and a fall off in unit sales.
Wednesday Afternoon Activity
The broad markets continued trading in negative territory until the final hour of trading. A buying spurt by institutions to dress up their portfolios with blue chips stocks on the final trading day of the month pushed the Dow Jones Industrial Average and the S&P 500 to modest gains. The tech-heavy NASDAQ Composite Index moved higher before the closing bell but remained in negative territory when trading stopped for the day. The Dow Jones Industrial Average moved up 56.56 to close at 8,736.59. The S&P 500 Index posted a modest 7.76 point gain to finish at 910.54. The NASDAQ Composite Index finished off 15.93 at 1,328.26. Apple lost $.17 on average volume of just under 6 million shares to end the day at $15.26.
After the close of trading on Wednesday Adobe Systems cut is revenues and earnings estimates for the current quarter based on poor July sales. Adobe shares plummeted in after hours trading to $19.28 from a closing price in New York of $23.96. Adobe now estimates revenues for the current fiscal quarter ending in August will be between $270 and $290 million versus a previous estimate of between $300 million and $320 million. Company executives emphasize that despite the revised estimates for revenues and earnings, Adobe continue to be profitable in a challenging economy. Adobe estimates quarterly earnings before extraordinary will be between $.18 and $.23 versus the $.24 to $.27 previously forecast.
No matter the tough time for tech stocks: Apple continues to expand its retail store presence. On Friday Apple opened a new and very large retail store in the Fairfax district of Los Angeles. The new store at The Grove is Appleis eighth retail store in California and the sixth store to open in the densely populated southern part of the state. The Grove is within close proximity of several motion picture and television studios, and a short drive from apartment complexes and neighborhoods popular with entertainment industry professionals.
Check out the new and vastly improved Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Appleis financial dealings!
For full quotes on all the companies mentioned in this article, we have assembled a set of stock quotes at Yahoo! for your reference. For other stories regarding Appleis stock activity, visit our updated Apple Stock Watch Special Report.