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March 30th, 2000

[5:00 PM] Apple Stock Watch: Nasdaq Corrects with Record Volatility, Apple Falls 7.5%
by Wes George

The Nasdaq lost 284 points in an old fashion market panic as investors dog piled at the exits, then bounced back 100 points in the last hour to close down 184 points. There was no breaking news to stimulate today's collapse. People just woke up this morning and realized the tech stocks as a group are highly over valued.

With the Nasdaq down 10% in a few days, now firmly in correction territory for the fourth time this year, the talk on Wall Street is how low can she go. There was genuine fear after lunch as tech stocks began to free fall, until the Nasdaq bounced off a support level around 4400. Experienced traders say this type of healthy market shake out is typical of a bottom, weak speculators turn over their shares to stronger hands. Although no one has much experience with the contracted time frame in which the activity has been compressed into. In the past a correction like we have since Tuesday could have taken weeks to work through.

Other observers note that this week's sell-off, especially today's nosedive, must be due to institutional investors reallocating funds at the end of the quarter away from technology and towards the beaten down, value laden, stocks of the old economy. Block trades, a measure of institutional trading activity, were 50% higher than average today, 1 out of every 3 trades on the NYSE was a fund trade. Next week, the 100 billion dollar question is whether the institutional buyers will return to the tech stocks to pick up bargains.

Apple gave back 10 3/16 or 7.49%, to close at 125 3/4 on volume of 3.7 million shares. Apple closed right in a strong support area and this would appear to present investors with a rare opportunity to pick up more AAPL before the upcoming earnings announcement, now just two weeks away, sends AAPL back toward new highs.

The Nasdaq fell 186 points (-4.02%), to close at 4457 on a volume of 1.9 billion shares traded. Losing 285 points by 3:00 pm EST is comparable to the Dow losing about 750 points. Nasdaq is down 11.7% from the year's high.

The Dow fell 38 points (-0.35%), but was up most of the day, to close at 10980 on volume of 1.176 billion shares. Newspapers, insurance companies, Oil companies, food, beverages and chemical stocks all had a strong day at the expense of the tech stocks.

The S&P 500 gave back 20.60 points (-1.37%) to close at 1487.92.

In Apple related businesses: Akamai lost 10 dollars to close at 160 1/16. ARM Holding fell 13 5/8 to close at 176 dollars. Adobe lost 4 3/16 to close at 107 3/16 dollars. Earthlink lost 13/16 to close at 19 3/4. Macromedia lost 3 dollars to 79. Motorola lost 10 1/2 to close at 144 1/2 dollars. IBM beat the trend, climbing 3 3/8 to 122 3/8.

Apple's competitors: Hewlett Packard lost 4 1/4 to close at 130 3/4. Dell gave back 1 5/8 to close at 52 3/16. Intel gave back 4 7/8 to close at 127 dollars. Gateway down 1 3/8 to close at 53 5/16. Compaq lost 2 1/16 to close at 26 7/16. Shares of Microsoft slipped 3 13/16 to 103 3/8.

In Economic News: The US government revised higher the estimate for fourth quarter growth in 1999 to a red-hot 7.3% annual rate up from 6.9%, that's more than twice the pace that the Federal Reserve has targeted as sustainable growth, and almost guarantees more interest rate hikes later this year by the Fed. The rate of growth in the last quarter of 1999 was the highest since the first quarter of 1984.

Tomorrow, expect personal income, personal spending, the Chicago PDI and factory orders for February to make news for the markets.

The bellwether 30-year US Treasury bond soared 1 19/32 to 105 14/32. The yield, which moves inversely to the price, fell to 5.86%.

For full quotes on all the companies mentioned in this article, we have assembled this set of quotes at Yahoo! for your reference. We also have many of these same quotes reported live (20 minute delay) on our home page. For other stories regarding Apple's stock activity, visit our Apple Stock Watch Special Report.


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