Markets, & AAPL, Move Higher In Volatile Trading

Tuesday Recap

On Tuesday the markets stumbled as investors locked in profits from Mondayis gains. The markets have been moving generally higher over the past few weeks and traders took time on Tuesday to take gains and evaluate the sometimes conflicting reports as to the health of the overall economy.

We are more than halfway through the third calendar quarter. Though the August gains have raised the hopes of traders, this hot summer month historically is not known for setting market trends. Investors are looking for clear signs that the third calendar quarter will witness increases in corporate revenues and earnings and that management will be more confident about future guidance.

On Tuesday, Dell Computer announced that it will begin to sell computers on a limited basis through dealers to better compete with so-called "white box" makers. White boxes are unbranded computers assembled by local dealers from components made by a variety of suppliers. This move will position Dell to capture portions of the very large white box market and enhance Dellis ability to further extend its market share gains.

Wednesday Market Activity

The markets experienced low volume but volatile prices as the indexes moved higher for the day. The blue chip index see-sawed between positive and negative territory while the NASDAQ remained in positive territory throughout the trading session. Comments by a Federal Reserve Bank president that news of continuing economic strength will diminish chances of another interest rate cut caused some investors to pause, but most traders were eager to move prices higher following Mondayis large gains and Tuesdayis profit taking activity. Retailers continue to find new favor on Wall Street as analysts suggest that the worst of the economic news has been put behind the sector.

The Dow Jones Industrial Average edged up 85.16 to close at 8,957.23. The S&P 500 Index advanced11.93 to end at 949.36. The NASDAQ Composite Index finished up 32.66, a move of more than two percent, to stand at 1,409.25. Apple moved higher by $.21 to close at $16.12. Advancing issues handily outpaced declining issues on the day.

Apple

On Tuesday iTools subscribers who have chosen to become early adopters of Appleis .Mac service received a surprise e-mail from Apple announcing that their first year of .Mac service will be extended through September 30, 2003 at no additional charge. The decision by Apple to extend all the first year of service on all iTools conversions to .Mac accounts eliminates the incentive for iTools subscribers to delay the conversion of their accounts until the end of the free trial period on September 30, 2002.

Earlier this year Apple executives stirred up controversy in the press over stock sales prior to the companyis earnings warning in late June. According to a recent report, Apple executives came back to the table to buy the companyis stock in early July. Apple CFO Fred Anderson publicly stated at the time the sales became news that the scheduling of the stock sales were due to restrictions on the periods in which executives could exercise stock options and sell the corresponding shares rather than issues relating to Appleis quarterly performance. The July purchases may represent another round of timed purchases and an optimistic view by Apple executives of the companyis prospects for the current quarter. Please read the TMO coverage of the emerging stock purchase story.

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