Tale Of Two Markets, Apple Climbs Against The Grain

The tech stocks are facing the prospect of a meltdown as the Nasdaq rips below support at its 200-day moving average. Meanwhile, the blue chips on the Dow fared far better. Poor earnings from former tech stock leaders like Amazon (AMZN), and warnings from WorldCom (WCOM), further contributed to the gloom among technology investors. Surprisingly, Apple beat the down draft today rising almost 4%.

Nokia (NOK), the worldis largest mobile-telephone maker, led the tech stocks lower after beating earnings estimates with a 62% surge in pretax profits, but then predicted earnings would slow going forward. A skittish Wall Street punished the stock cutting it back by 14 9/16 to 41 1/4. In Finland where Nokia is the largest stock on the Helsinki Index (HEX) Nokiais bad day sent the index down about 15%, the worse single day in HEX history.

Amazon missed earnings yesterday and today settled into a new 52-week low. AMZN lost 4 11/16 to close at 31 3/8.

Apple climbed 1 15/16 to close at 52 dollars on volume of 5.2 million shares. All of todayis gain came in the last 50 minutes of the trading session.

The only news that could account for Appleis strong performance in a down market is a ZDNet report that Apple is developing handwriting recognition software to ship with OS X based on the technology Apple originally developed for the ill-fated Newton PDA.

Also, yesterday, another ZDNet report broke the news about a new G4 packing PowerBook, code-named Mercury.

Combined, these reports illustrate what Steve Jobs and Fred Anderson, Appleis CFO, repeatedly stressed at MACWORLD, "...our new product pipeline is very strong. Thereis lots more interesting stuff coming..."

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

The Nasdaq fell 145 points (-3.65%) to close at the dayis low of 3842 on volume of 1.7 billion shares traded.

The Nasdaqis 200-day moving average is at 3865. In recent weeks the average has been support for the index. Closing below the 200-day moving average, technically speaking, means the bounce that could have been reasonably expected here failed to materialize and further downside is indicated by the chart. How much downside is anyoneis guess. Support levels established in early June at about todayis closing price to 3750 may still hold. If not, the next support levels are in the 3600 range. Of course, the Holy Grail of bearish retreats for the Nasdaq would be to retrace all the way back to the 3155 low set on May 24th this year.

The Dow gained 69 points (0.66%) to close at 10586 on volume of 1.1 billion shares.

The S&P 500 dropped 2.80 points (-0.19%) to close at 1449.62.

In Apple related businesses: Akamai slid 6 9/16 to 78 1/8. Adobe fell 10 7/16 to 113 1/2. Earthlink fell 1 11/64 to 13 1/2. Motorola shed 3 dollars to 33 5/8. IBM climbed 1/4 to 110 1/8.

Appleis competitors: Dell lost 1 3/8 to close at 45 1/2. Gateway was off by 13/16 to close at 57 3/4. Compaq gave back 3/8 to close at 28 7/8. Shares of Microsoft climbed 1 9/16 to 69 3/8. Intel fell 2 dollars to 137. Hewlett Packard lost 4 5/16 to close at 105 11/16.

In economic news: The employment-cost index (ECI), a measure of inflation in the labor market, rose a seasonally adjusted 1% in the second quarter, slowing from the 1.4% growth pace in the first quarter and meeting economistsi expectations.

Durable goods orders, a measure of demand for goods that last three or more years, soared 7%, its largest monthly gain since July of 1991. A slowing economy doesnit deliver such strong consumer demand numbers.

Conclusion: We can starting worrying about more interest rate hikes from the Federal Reserve during their next meeting about a month from now. And more interest rate hikes will stoke fears on Wall Street that the so-called "soft landing" economic slowdown planned by Mr. Greenspan could turn into a recession of sorts.

Tomorrow morning look for the gross domestic product data.

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.

No Comments

Log-in to comment