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June 2nd, 2000

[4:30 PM] Apple Stock Watch: AAPL Rallies On Lower Earnings Forecast!
by Wes George

The Nasdaq ended this shortened week up 18.8% making this the single most profitable week in Nasdaq history -- at least for those who bought in on Tuesday. Volume is up, a major rally has started, upside momentum is building and we are still closer to recent lows than highs. Meanwhile, AAPL got up off the mat and is throwing punches. Next week should bring more sweet revenge for the bulls.

Apple's stock has seven new brokerage reports in May in addition to the six issued in April. But you better do your own homework. An interesting post on the Motley Fool Apple stock board explains why heeding predictions from stock pundits, such as myself, or brokerage analysts may be unhealthy for your portfolio.

Today's stampede of well-rested bulls was set off this morning by a weaker than expected May jobs report which also showed little sign of wage inflation. A busy week full of new economic data now suggests the Fed's rate hikes are slowing the economy, thus substantially altering the odds for further interest rate hikes this summer.

The US unemployment rate rose to 4.1%, after early forecasts were for it to remain steady at 3.9%. Average hourly wages went almost nowhere, edging up a miserly one cent to $13.65 in May, while workers worked 6 minutes less a week at 34.4 hours per week. Analyst's had expected hourly wages to rise closer to 0.4%.

Since the unemployment rate is a so-called trailing indicator, meaning it responses to changes in economic conditions after the fact, our economy could be slowing much faster than was apparent only last week. However, history shows that the May and June jobs data is notoriously volatile, often seriously understating the economy's strength.

Also, the Commerce Department released April's factory orders data this week showing a larger-than-expected tapering off from March. The Wall Street Journal said, "demand for manufactured goods in April posted their largest decline since November 1990, dragged lower by waning desire for electronics components."

Fed watchers across Wall Street are moderating their forecasts for further interest rate increases this year by the Federal Reserve, and that bodes well for both the nascent summer tech stock rally and for the Autumn too. A CNBC poll of 10 economists showed that 7 expect no interest rate increase by the Fed on June 28th, but the jury is not in yet for August. After all, there is still two month worth of new economic numbers to sweat over before then.

Apple climbed 3 7/16 or 3.86% to close at 92 9/16 on volume of 7.0 million shares.

The Nasdaq surged 230 points (6.44%) to closed at 3813 on high volume of 1.9 billion shares, placing the index above its 200 day moving average once again.

The Dow climbed 142 points (1.34%) to close at 10794 on volume of 1.1 billion shares. The Dow rose 488 points this week or 4.7%. Defense stocks such as food, utilities and drugs were among the rare weak spots on the NYSE today, while the oil service index (OSX) sunk more than 6.0%.

The S&P 500 gained 28.45 points (1.96%) to close at 1477.26.

The Mac Observer Stock Watch Virtual Portfolio really needs this rally just to get out of the red.

In Apple related businesses: Akamai climbed 15 1/8 to close at 89 dollars. ARM Holdings gained 3 9/16 to close at 32. Adobe soared 6 1/2 to close at 125. Earthlink gained 2 3/8 to close at 18 dollar. Macromedia rose 4 1/16 to 89 7/16. Motorola climbed 3 1/4 to close at 36 7/8. IBM gained 2 1/2 to 108 1/2.

Apple's competitors: Hewlett Packard jumped 8 bucks to close at 142 1/4. Intel climbed 4 1/2 to close at 134 3/16. Gateway gained 5 15/16 to close at 54 15/16. Compaq rose 7/8 to close at 26 7/8.

Microsoft denied rumors today that the company was considering fleeing the US to Canada to avoid prosecution in its ongoing antitrust case. Personally, I would deny the whole company bail. ; ) Microsoft climbed 1 3/4 to close at 66 5/16.

The 30-year US Treasury bond climbed 1/32 to 104 11/32 in a The yield, which moves inversely to the price, dropped to 5.94%.

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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