Tech Stocks Compress Further On Tax Loss Selling

On a very cold day after Christmas the markets opened to less than enthusiastic traders, who seemed to mostly be taking care of year-end business. The tech-heavy Nasdaq suffered disproportionately as it barreled towards what could be its worst year in the 29-year history of the exchange. Appleis stock gave back Fridayis gain.

On the bright side, in years of strong tax loss selling —such as 1994 — a true "January effect" often kicks in, powered by institutions plowing recently withdrawn capital back into beaten down stocks.

Williams Co. (WMB), an energy trading company involved in the emerging bandwidth market, announced earnings well above Wall Streetis expectations. In fact, most the energy businesses are going to post formerly dot-com-like gains for 2000, as natural gas prices soar to new highs and temperatures stay low.

Fed Fund futures are now tipped towards an unusually large 50 basis point interest rate decrease from the Federal Reserveis next meeting on January 31st.

Meanwhile, the usual post-Christmas retail sales count is beginning and it doesnit look encouraging when compared to recent years. Online e-tailers are reporting traffic growth in the 25% range over last December, but that is well below levels e-tailers planned for when buying inventories and far below what investors had expected. Nevertheless, Yahoo (YHOO) announced its sales are up almost 100% over last year and Kmartis (KM) online division, bluelight.com, claims a remarkable 1000% sales increase this Christmas over last seasonis numbers.

Appleis stock drifted lower by 5/16 or -2.08% to 14 11/16 on volume of 3.8 million shares.

As MacWorld in San Francisco approaches speculation centers around Appleis radically new OS X.

"The geeks have already weighed in on OS X, but Appleis new OS is also targeted at iMac-toting consumers," comments MacWeekis Stephen Beale. "Will the Aqua GUI be enough to hide them from the underlying complexities of Unix? Will they take to the Unix-derived directory structure? Many of the factors that might push professional users to OS X--such as better MP performance--donit really apply to consumers."

The gloom in the computer hardware sector continues. "Personal computer makers are slashing prices in an effort to salvage a weak holiday shopping season, setting the stage for a possible price war over the next few months," notes a Reuters report. "While exact data is not yet available, analysts said anecdotal evidence suggests computer sales have been poor over the past few weeks, as consumers tightened the grasp on their wallets in fear of an economic slowdown."

The Nasdaq fell 23 points (-0.93%), but cut early day losses in the last hour, to close at 2493 on very low volume of 1.5 billion shares. The Nasdaq is down 35% for the year.

The Dow climbed 56 points (0.53%), after being lower most of the day, to close at 10692 on light volume of 801 million shares. Volume is not expected to increase as the week unfolds into the New Year weekend.

The S&P 500 climbed 9.23 points (0.71%) to close at 1315.20.

In Apple related businesses: Dell lost 7/8 to 17 1/2. Gateway fell 0.10 to 18.02.

Motleyfool.com is ready to bet the ranch that Intel will win the MHz wars, but the real question may be: Does it matter? Intel fell 1/16 to 32 7/8.

Don Coxe of Harris Investment Strategies said on CNBC to stay away from Microsoftis stock because the software giant, "will never be the type of company it was before" the ongoing antitrust case, even if Redmond wins. The "genius of Bill Gates" will necessarily be replaced with uninspired leadership by teams of lawyers.

On the other hand, Mr.Coxe likes IBM stockis value, although as a lesson for Microsoft, he noted the stock has never traded as high as it did before Big Blueis own antitrust problems in the early 1970s.

IBM lost 4 3/16 to 84 13/16. Microsoftis stock gained 7/16 46 7/8.

In economic news: A stalled winter storm over the North American continent pushed all types of fuel prices higher and natural gas prices climbed to yet another all-time high.

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.

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