Tech Stock Rally Fails, But Blue Chips Post Gains

After yesterdayis tax loss selling bloodbath, stocks bounced in the morning, but only the Dow was able to hold onto significant gains. Investors sold into todayis tech stock rally as more news of missed earnings added to the morose market atmosphere. Apple stock closed down slightly.

"The semiconductor and computer sectors -- some of the hardest-hit in the recent sell-off --both gave back intraday gains," reported The Wall Street Journal. "The Nasdaq composite is down more than 50% from its March 10 high, deep in bear-market territory, and market watchers say any rally attempt is suspect amid broad worries about earnings and the effect of the slowing economy."

Yesterday, a Merrill Lynch survey found that the percentage of businesses planning to spend more on IT capital improvement in 2001 slipped from 76% to 56% in just the last month, indicating the possibility of a prolonged downturn for the industry.

Appleis stock lost 5/16 or -2.17%, to close at 14 1/16 on volume of 6.5 million shares.

ZDNet News reported that an Apple team is in Germany to promote Mac OS X development internationally. "According to Apple, there will be no further beta releases or updates;" claims ZDNet, "the next version of Mac OS X will be the golden master distributed to developers."

Forbes.com is ready to sing a requiem for desktop PCs. "PCs are in 85% of U.S. homes with kids and income of $70,000 or more." Forbes points out. "Overall, 60% of all homes have PCs, but the rate of expansion is slowing. Nor does the other 40% look like an eager audience: In 1999 71% of new PCs went to homes that already had one, Gartner Group says."

The Nasdaq gained 7 points to 2340 with huge volume of 2.6 billion shares traded.

The Dowis rally held 168 points (1.63%) at 10487 on volume of 1.4 billion shares.

The Dow had strong market on close orders especially in basic material stocks and retailers. Capital goods businesses, like Caterpillar Inc. (CAT) added to recent gains — not a sign one would expect if a regular industrial age recession was fast approaching.

The S&P 500 gained 10.12 points (0.80%) to close at 1274.86.

In Apple related businesses: Akamai lost 2 3/4 to close at 21 3/16. Thomas Weisel downgraded Akamai from a "strong buy" to a "buy" even though the stock trading at an all time low. Go figure. Adobe gained 2 9/16 to close at 59 13/16.

Have you noticed that IBM is one of the few major tech stocks not to warn lately? Rumors are going around that Big Blue may be the next to stumble. Shares of IBM dived 4 7/16 to 81 9/16.

The handheld computer stocks got hammered after Palm Inc. (PALM) beat earnings by a penny. Shares of Palm lost 12 1/2 to 25 5/8. Research In Motion (RIMM) fell 9 1/16 to 65 15/16 and Handspring Inc. (HAND) got axed -23% to 33 15/16

Real Networks (RNWK) lost 4 3/8 to 5 9/16 after announcing they missed earnings substantially. 12 analysts, in what must be some sort of new record, downgraded the stock today. WR Hambrecht & Co. said, "our new 2001 estimates are substantially lower than management guidance. Management cited reduced technology spending, declining receivable quality, reduced advertising expenditure, and reduced advertising rate as reasons for the shortfall."

The European Union is considering combining the cases against Redmond to "get a better picture of Microsoftis overall business practices." Meanwhile, the worldis largest software monopoly is buying Great Plains Software Inc. (GPSI) a maker of business management software in a stock deal worth $1.1 billion. Shares of MSFT climbed 1 15/16 to close at 43 7/16.

In economic news: Q3 gross domestic product was revised downward to a 2.2% pace from 2.4% reported earlier, said the Commerce Department. The pace is the slowest growth rate in 4 years and well down from 5.6% pace reported Q2 2000.

For other stories regarding Appleis stock activity, visit our Apple Stock Watch Special Report.

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