For the second day in a row, investors frightened by numerous inflation scares and rumors of an imminent increase in interest rates from the Fed sent Apple and most of the rest of the market down. According to an AP report:
The fear of higher interest rates has become so pervasive on Wall Street that traders today looked past one strong indication that inflation has not returned to the US economy.
In an eagerly anticipated report, the government said the Producer Price Index rose only 0.2 percent last month. The index, which measures inflation before it reaches the consumer, was expected to offer an indication whether the Fed will raise interest rates at its next policy-making meeting, scheduled for June 29 and 30.
But this afternoon, a pair of rumors swept through the uneasy stock and bond markets. Word spread that the Fed had convened a special, early meeting to debate a rate increase. Some traders also cited a rumor that Tiger Management LLC, a hedge fund, was about to fail.
Both rumors were later refuted, traders said, but the damage was done. The yield on the 30-year Treasury bond soared to 6.14, pulling any willing buyers away from stocks.
The fragile state of the morning rally led investors to focus on two less favorable barometers of the current economy.
The Commerce Department reported that retail sales -- which represent about a third of the nation's economic output -- rose 1 percent in May, extending a long string of gains.
In addition, the University of Michigan's consumer sentiment index rose to better-than-expected levels, showing that Americans remain upbeat thanks to the strong U.S. economy.
The signs of economic strength helped convince some traders that an interest rate increase was in the offing.
The Dow closed at 10490.51, down 130.76 while the Nasdaq closed at 2447.88, down 36.74.
Apple closed at 46 7/16, down 1 11/16 on a very low volume of 1,651,000 shares trading hands. That represents Apple's steepest decline in nearly two weeks of up and down trade.
Apple PC competitors ckised mostly down with IBM, Compaq, Hewlett-Packard, and Dell all closing down. Gateway 200 closed slightly up.
The Mac Observer Spin: There was no news related to Apple to cause today's slide. Right now the markets just seem skittish with everyone focusing on inflation worries. It is very likely that Apple's stock will resume its climb as we get closer to MacWorld Expo New York in July. This dip may just represent an opportunity for some traders to make more of a profit. Of course, more bad news in the inflation world could mean more falls for Apple.
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