The Dow Rallies, but the Nasdaq Rolls Over and Apple Declines

Tech stocks continued to drift south today after last weekis hopeful rally. The Dow continues to outperform the Nasdaq. PC related stocks were particularly weak today, including Apple.

The talk among traders is that last weekis rally must have been too much to hold for many tech stocks. Meanwhile, investors are trading in sympathy with every negative earnings announcement. Perhaps more important are the accumulating signs of economic slowdown, which have many observers forecasting that the Nasdaq will be stuck in a trading range until the Federal Reserve cuts interest rates.

National Semiconductor (NSM), a manufacturer of chips for cell phones, warned that a slow down in the cell phone market is going to hurt earnings in the next quarter or two. However, Merrill Lynch analyst Joe Osha said, "We think that National may have some company-specific problems, related mostly to channel management, in both the PC and wireless businesses."

Compaq (CPQ) reports earnings after the bell. The worldis largest PC vendor is expected to meet earnings of $0.29 per share on revenues of $9.65 to $9.85 billion. The PC stocks sold-off ahead of Compaqis announcement as if bracing for the possibility that the Houston-based PC vendor might lower expectations going forward in its conference call with analysts. Compaq has already said it will meet earnings.

Nortel Networks (NT) and Amazon (AMZN) also report earnings later this afternoon and their results, along with Compaqis are likely to set the tone for trading on the Nasdaq tomorrow.

Appleis stock lost 1 1/2 points, or -7.36%, to close at 18 7/8 on volume of 13.5 million shares.

According to ZDNet News, "Apple Germany enjoyed a 30 percent increase in its customer base over the past fiscal year while enjoying strong sales to professional customers." Appleis share of the German PC market climbed from 1.5 percent in 1998 to 2.4 percent today.

MacCentral.com rehashed the slew of downgrades Appleis stock has recently endured. "Analysts do not appear to be optimistic about the earnings picture at Apple over the next two years. The company is expected to show a decline in earnings in 2001 of 48.2 percent. While a rebound in earnings of 15 percent is expected in 2002, it will not offset the decline suffered this year."

In other news, a Power Mac G4 Cube may soon become the first Web server in orbit due to a NASA agreement with a private company to test the feasibility of satellite-based Web servers, according to a spaceref.com article. The G4 Cube will use Mac OSX running an Apache Web server and play host to several thousand Web sites. The article noted that the Cube has some advantages over other PC designs in space, "since its passive cooling technology has some definite advantages in a microgravity environment."

The Nasdaq lost 48 points (-1.41%) to close at 3419 on volume of 1.8 billion shares.

National Semiconductoris problems made for a poor day for the Philadelphia Semiconductor Index ($SOX) which is down about 36% since Labor Day and 47% from its high this summer. Internet, biotech and computer hardware stocks were all lower

The Dow rallied 121 points (1.18%) to close at 10393 on volume of 1.15 billion shares.

The S&P 500 climbed 2.34 points (0.17%) to close at 1398.12.

In Apple related businesses: Akamai shed 2 3/4 to 53 dollars. Adobe rallied 9/16 to 135 3/8. IBM lost 1 1/2 to 91 3/8.

Appleis competitors: Dell lost 11/16 to 26 13/16. Compaq dropped 0.72 to 26.98. Shares of Microsoft lost 5/8 to 61 1/2. Intel slipped 1 5/16 to 42 dollars. Gateway was down 4 7/16 to 49 15/16.

Hewlett Packard got hit for a 5 3/4 loss to 92 5/8 on rumors that HP will miss earnings.

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 recently updated Apple Stock Watch Special Report.

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