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February 17th, 2000

[4:00 PM] Apple Stock Watch: The Tech Sector Rallies And Apple Closes Higher
by Wes George

Although today a perennially cautious Alan Greenspan warned Congress to expect more interest rate hikes he was exuberant in his vision for our economic future, forecasting the US gross domestic product will expand by 3.5 to 3.75% this year while inflation stays in check. The market reaction was mixed.

While the tech stocks embraced Mr. Greenspan's optimistic views of our high tech future, the retail sectors and financial stocks reeled on fears that the Fed really is going to slow the economy and chill the consumer spending spree now in progress.

According to the Wall Street Journal, "Mr. Greenspan noted that tight labor markets have yet to increase wage pressures and in fact unit labor costs, a measure of wages tied to output, actually declined in the second half of 1999.

He attributed this to a remarkable rebound in the growth of productivity, the amount of output per hour of work, which helps keep inflation low by allowing employers to pay for higher salaries through increased production rather than raising prices.

But even if the gains in productivity continue, he said, they could have a downside for the economy by pushing soaring stock prices even higher. The Wall Street boom has contributed to the surge in consumer demand as investors have spent their stock gains with abandon."

Apple clawed its way back 3/4 of a dollar or 0.66% to close at 114 7/8 on 2.6 million shares traded.

It's interesting to note that AAPL's chart pattern since December is a textbook perfect example of what technical analysts call a "bull flag", while in the last few weeks an impressive "ascending triangle" has emerging.

The Nasdaq gained 121 points to close at 4548 for a new high. Volume was over 2 billion shares. Biotech stocks, up 9.5% today, led the way higher for a broad tech rally.

The Dow lost 46 points (0.44%) to close at 10514 with 1 billion shares traded. The small cap stocks continued their up trend pushing the Russell 2000 to its second new high in as many days.

The S&P 500 lost 3.17 (0.23%) to close at 1388.

In Apple related businesses: Adobe climbed 3 3/8 to close at 101 9/16. Akamai gained 5 7/8 to close at 252 dollars after announcing a content streaming deal with AOL yesterday.

ARM Holdings lost 2 1/4 dollars to close at 215 3/4. Motorola lost 3/4 to close at 147 1/8. IBM gained 1 1/4 to close at 117 dollars. Shares of Earthlink (ELNKD) lost 3/16 to close at 21 15/16. Macromedia gained 5 11/16 to 73 5/8.

Apple's competitors: Compaq gained 1/4 to close at 26 1/8. Intel gained 2 13/16 to close at 110 dollars. Gateway gained 13 /16 to 56 5/16.

Someone bought a block of 200,000 shares of Dell in the last half hour of the session. Perhaps, an institutional investor is betting that Win2000's steep hardware requirements will lead to increase business sales for the company. Dell gained 2 11/16 to 40 11/16 dollars.

Hewlett Packard reported disappointing profit margins for the first quarter while beating the earnings estimates of $0.78 by $0.02. DB Alex Brown raised their recommendation on HWP to a "strong buy" rating from a "buy" rating, and Lehman Brothers raised its price target from $160 from $130. HWP slipped 3 13/16 to close at 127 3/16.

Bill Gates told CNBC that Win2000 will present compatibility issues for users who attempt an upgrade. "I think it's fair to say that that one in four customers may have some issues as they move up, but the benefits are very dramatic", said Mr. Gates. He believes that, "over the next couple of years all the business desktops will move to Windows 2000, whether that's upgrading the system in place or getting new hardware that's got Windows 2000 installed." Shares of Microsoft gained 2 dollars to close at 99 5/8.

In other news: The producer price index for January, a measure of inflation at the wholesale level, remained flat while the December figure was revised downward to 0.1% growth rather than 0.3% reported earlier. In 1999 wholesale prices grew 3.0%, largely due to soaring oil prices.

The bellwether 30-year US Treasury bond traded up 17/32 to 100 11/32. The yield, which moves inversely to the price, dropped to 6.22% from Wednesday's 6.26%.

In the week ahead: Tomorrow morning that all important inflation indicator, the consumer price index for January is released by the US Labor Department.

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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