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April 24th, 2000

[4:30 PM] Apple Stock Watch: Microsoft's Woes Sicken The Stock Market, But Investors Buy More AAPL
by Wes George

Wall Street hates when the government plays big-brother-knows-best with the business world. So when the news broke that the DOJ is going to force a divestiture of at least one Microsoft business unit, the markets knee-jerked with a temper tantrum comparable to the Cuban community's reaction to the INS dawn raid over the weekend. Ironically, Attorney General Janet Reno and her storm troopers at the Justice Department are at the bottom of both these upheavals.

The Mac Observer Stock Watch Virtual Portfolio had a weak day along with the general softness on the Nasdaq.

Apple gained 1 5/8 or 1.37% to close at 120 1/2 on volume of 3.95 million shares. A article reported that Apple posted "a 28% increase in shipments and a 4.4% market share--up from 3.9% a year ago. All the top-tier PC makers saw their market share increase, owing in part to IBM's problems and to Packard Bell NEC's withdrawal from the U.S. market." Apple's U.S. market share is in sixth place behind EMachine according to the article.

The Nasdaq shed 160 points (-4.41%) to closed at 3482 on volume of 1.5 billion shares traded. The Nasdaq was down more than 297 points but rebound late in the day. The Microsoft news hit the fan and most tech stocks got splattered.

The 10-day and 5-day ARMS Index for the Nasdaq, a measure of selling pressure, is showing the most oversold position since October of 1998, indicating that a rally may be in the making. However, in a bear market the ARM Index can stay locked in the oversold region for extended periods of time.

Many market technicians believe the Nasdaq was bound to retest the low of 3321 set back on April 7th and Microsoft's woes were just the catalyst on which the market moved. The economic data heavy week ahead may provide more angst for the investors later this week.

The Dow climbed 62 points (0.57%) to close at 10906 on very light volume of 870 million shares. Microsoft, a recent addition to the Dow, held the index back by 62 points and knocked 79 points off the Nasdaq.

The S&P 500 lost 3.54 points (-4.54%) to close at 1429.86.

In Apple related businesses: Akamai lost 11 1/16 to close at 75 7/8. ARM Holdings lost 3 1/8 to close at 28 1/8. Adobe got slammed 7 7/8 to close at 104 3/4. Earthlink lost 15/16 to close at 13 1/8. Macromedia gained 1/2 to 60 1/2. Motorola dived 6 1/16 to close at 104 15/16. IBM bounced back late in the day by 2 dollars to 106.

Apple's competitors: Hewlett Packard slipped 7 3/16 to close at 132 5/16. Intel gained 3/4 to close at 116 1/8. Gateway lost 1 13/16 to close at 53 1/16. Compaq lost 1 5/16 to close at 26 1/8.

Shares of Microsoft nose-dived 12 5/16 to 66 5/8. Microsoft, at a new 52-week low, is down 45% from its all time high of $120 for a mind boggling loss of $282 billion worth of market capitalization. Goldman Sachs analyst Rick Sherlund downgraded Microsoft to 'market outperformer' from his 'recommended list', and SG Cowen cut its rating on the stock to 'buy' from 'strong buy'.

The Economic Calendar this week is packed with market moving data releases. Tomorrow look for the consumer confidence number and existing home sales. On Tuesday durable goods orders, and the retail trade numbers are released. Thursday is busy with jobless claims, gross domestic product, employment cost and the M2 money supply data. The GDP is expected to show that the economy is growing at 6.0%, still too fast for the Federal Reserve which fears that prosperity may break out. And on Friday personal income and the Chicago PMI may move the market.

Wall Street will be watching all these data closer than usual for evidence that the Federal Reserve's program of interest rate hikes are beginning to take effect or for signs that inflation is accelerating. Either way the market reaction is likely to be emotional given the on edge mental state of many investors.

The bellwether 30-year US Treasury bond lost 18/32 to 105 10/32. The yield, which moves inversely to the price, dropped 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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