Tech Rally Shepherds Apple Back Above 19

| Apple Stock Watch

Would you like chips with your salsa? Merrill Lynch suggested you may want to consider it and issued positive comments about the chip sector. Despite including a warning that AMD and Intel will both face steep pricing pressures, the comments helped send tech stocks soaring. From a Reuters report:

"Most earnings guidance or blowups are behind us, another Fed rate cut is coming in August ... and the tax rebate checks are in the mail," said Charles Pradilla, chief investment strategist at SG Cowen Securities. "You put all that together and all you need is a spark like the Merrill upgrade."

The Nasdaq closed 40 points higher after giving back some ground in afternoon trading. The Dow moved higher too, but actually ended up in the red by the time all was said and done as Blue Chips paid the price for the tech upswing. Volume was fairly healthy on both indexes as the Dow traded 1.3 billion shares, and the Nasdaq traded almost 1.8 billion shares. Of the stocks we track in the Stock Watch, only Earthlink closed lower.

Industry News

Microsoftis inability to release a truly secure operating system hit the Pentagonis network today, though why the US government would rely on a Microsoft-built OS is another question. The Code Red virus, released by societal secondhanders earlier this year, is busily infecting what current estimates are pegging at 250,000 Microsoft IIS 4.0 servers around the world. Thatis the same amount that were hit in June, the last time the virus made its presence felt. The Pentagon felt what it called a "disturbance" in its network today, but did not suffer any damage. From a Reuters story:

"The worm is an ugly thing," U.S. Army Major Barry Venable said in a telephone interview from Colorado Springs, where the U.S. military monitors its networks. "Here at DoD, weive observed several disturbances to our networks as a result of this thing working on the Internet, but weive seen no significant degradation to DoD yet," Venable said.

The Defense Department, which operates hundreds of Web sites, had to temporarily shut down public access to them during the July onslaught of Code Red. Venable would not elaborate on whether Wednesdayis "disturbances" included slow operation or whether any systems were shut down, but said of Code Red, "We will continue to evaluate the threat that it poses."

The FBI-led National Infrastructure Protection Center said in an online update: "Based on preliminary analysis, we expect a level of worm activity comparable to the July 19 Code Red infection, which resulted in infection of over 250,000 systems. It should achieve that level of activity by this afternoon."

The cost to the world wide economy for these "disturbances" often reaches into the billions of dollars in lost productivity and maintenance costs. There have been no damage estimates issued for this round of Code Red, but the virus is actually still in the process of ramping up.

Apple Industry News

Apple spent the entire day in positive territory, though much of the dayis gains were erased in the last two hours of trading. Trading left the stock above the 19 mark after having dipped below 19 in the last two days of trading. AAPL moved steadily higher throughout the morning, but stalled out in the early afternoon and headed back down to close 11 cents off the dayis lows. Volume was light, and the dayis range was 18.95 - 19.78.

Apple closed at 19.06, up 0.27 (+1.44%), on light volume of 5,431,000 shares trading hands.

The Nasdaq closed at 2068.38, up 41.25 (+2.03%), on volume of 1,784,422,000 trading hands.

The Dow closed at 10510.01, down 12.80 (-0.12%), on volume of 1,308,674,000 trading hands.

The S&P 500 closed at 1215.93, up 4.70 (+0.39%).

Adobe closed at 38.61, a gain of 1.12 (+2.99%), on strong volume of 5,869,900 shares trading hands.

Akamai closed at 8.01, up 0.26 (+3.35%), on volume of 2,122,200 shares trading hands. Apple is a large shareholder of Akamai.

Earthlink closed at 16.35, down 2 cents (-0.12%), on light volume of 1,243,200 shares trading hands.

IBM closed at 107.06, up 1.85 (+1.76%), on light volume of 6,036,100 shares trading hands.

Macromedia closed at 17.88, up 0.68 (+3.95%), on light volume of 636,900 shares trading hands.

Motorola closed at 19.14, a gain of 0.45 (+2.41%), on volume of 12,001,900 shares trading hands. Motorola manufactures the processors used in Appleis Macintosh line.

Dell closed at 27.18, up a quarter (+0.93%), on light volume of 23,540,000 shares trading hands.

Gateway closed at 10.60, up 11 cents (+1.05%), on strong volume of 3,654,600 shares trading hands.

Intel closed at 30.75, higher by 0.94 (+3.15%), on light volume of 45,022,300 shares trading hands.

Microsoft closed at 66.47, up 0.28 (+0.42%), on light volume of 27,836,600 shares trading hands.

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