The markets suffered a remarkable case of whiplash today as it took some 18 hours or so for investors to get excited about yesterdayis cut in interest rates from the Fed. Actually, what truly helped spur the rally today was the fact that the Consumer Pricing Index for April came in with an increase of only .3%. That says that inflation is firmly in check, and that means there is plenty of room for the Fed to cut rates further should they see the need. A round of drinks all around. But wait, thereis more. Not only is inflation in check, housing starts for April were also strong, and that means that consumers are still alive and kicking. Another round of drinks all around. The moral to this story is that yesterdayis rate cut equals todayis excitement about the future of the economy. From a Reuters article:
"Yesterday, there was the feeling there would be further rate cuts in the future so the Fed was preparing us for a possible meltdown," said George Rodriguez, senior vice president at brokerage Guzman & Co. "Today, investors are saying: iWe just had five rate cuts. History tells us that should be an impetus for a strong equity market in the next six to nine months.i"
Not everyone is running with the Bulls, however. From the same Reuters Report:
"There is a ton of money out there and whenever people see a rally they say, iHey, maybe I better put some money to work here.i That and a subway token will get you a ride uptown," said Ned Collins, a trader at Daiwa Securities America. "I just donit believe we have come to the end of profit warnings and I think earnings are going to be key."
That may or may not be, but the Dow turned in the 5th largest one-day point gain ever, according to CNBC. Volume was also strong for the first time in many, many days. The Nasdaq churned through 2 billion shares, while the Dow traded a slightly more sedate, but more robust than is usual of late, 1.3 billion shares. Coupled with strong gains across the board, this suggests that the Bulls are gaining strength.
HP reported its 2nd fiscal quarter results today (quarter ended in April). The company beat its lowered estimates for the quarter, but warned of falling revenues in future quarters. The company earned a pro forma profit of 18 cents per share on US$11.6 billion in revenues. Consensus estimates had been 15 cents a share. HP affirmed its earnings guidance of 23 cents per share for the next quarter despite warning of potentially falling revenues.
In the meanwhile, Microsoft is all about the Xbox. We offer you links to stories about the Xbox from Reuters and The Standard, but there are many more where that came from. David Coursey, the ZDNet columnist that likes to inflame anyone and everyone (we are starting to like him) is taking aim at Microsoftis new licensing model. He suggests, as we have done, that Microsoft can only make these changes due to its monopoly power, and that the judicial system will probably be interested. Itis a very good piece, and we recommend it.
The Standard also offers us a piece offering anyone looking for something "free" a lesson. iTaint no such beast, but check out the article.
Apple is continuing to get headlines for its new retail stores. CBS Marketwatch and the Wall Street Journal both published interesting pieces on the new stores. AAPL participated in todayis rally by rising almost 4%. The stock took off in the morning and just kept rising throughout the day, though it gave back 40 cents in the last 20 minutes of trading. Volume for AAPL was light, however, and the stock traded in a range of 22.85 - 24.50.
Apple closed at 24.1002, up 0.9202 (+3.97%), on light volume 5,753,900 shares trading hands.
The Nasdaq closed at 2166.44, up 80.86 (+3.88%), on volume of 2,079,458,000 shares trading hands.
The Dow closed at 11215.92, a gain of 342.95 (+3.15%), on volume of 1,353,137,000 shares trading hands.
The S&P 500 closed at 1284.99, up 35.55 (+2.84%).
Adobe closed at 41.09m up 2.30 (+5.93%), on light volume of 5,174,000 shares trading hands.
Akamai closed at 9.96, up 0.80 (+8.73%), on light volume of 2,364,700 shares trading hands. Apple is a large shareholder of Akamai.
Earthlink got a thumbs up from Credit Suisse First Boston on the deal they worked out with OfficeMax to copromote each otheris services and products. ELNK closed at 13, up a quarter (+1.96%), on light volume 2,226,900 shares trading hands.
IBM and Toshiba are ending a joint-venture LCD manufacturing company due to low-cost competition from South Korea. IBM closed at 115.80, up 2.22 (+1.95%), on light volume of 7,796,100 shares trading hands.
Macromediais Flash software is going to be included in future Sony PlayStation2 systems, as Sony seeks to move the PS2 to the Internet. MACR closed at 21, up 1.59 (+8.19%), on light 1,289,800 shares trading hands.
Motorola is going to be laying off some 600 workers at a cell-phone manufacturing plant in Mexico. We wish those workers luck in their next endeavors. TheStreet.com reports on Motorolais messed up customer-financing effort that is likely going to cost them many hundreds of millions of dollars. MOT closed at 15.65, up 0.69 (+4.61%), on light volume of 12,231,000, on volume of 13,488,000 shares trading hands.
Dell closed at 25.38, up 0.89 (+3.63%), on moderately volume of 35,064,200 shares trading hands.
Gateway closed at 18.39, up 0.70 (+3.96%), on volume of 2,065,300 shares trading hands.
Intel closed at 28.36, up 1.16 (+4.26%), on strong volume of 59,794,700 shares trading hands.
Microsoft closed at 69.16, up 0.89 (+1.30%), on strong volume of 45,906,400 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. You can also check out our Apple Financial Boards, a new moderated forum for Apple Investors and people who are interested in Appleis financial dealings.