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January 21st, 2000

[4:00 PM] Apple Stock Watch: Nasdaq Busts Volume Record, Apple Loses Some Of Yesterday's Gains
by Wes George

It's the same old headline: The care free technology stocks drift higher while the serious NYSE blue chips fret every detail, like rising fuel costs and interest rates. Everyone is wondering just how far this mother-of-all tech rallies can extend itself beyond the market fundamentals, which by now seem meaningless.

Apple suffered short term profit taking, down 2 3/16 or 1.93% to close at 111 5/16 with a volume of 4.4 million shares traded. Apple was trading at 89 dollars only 6 sessions ago. Thursday, AAPL scored an all time high of 121 1/2 during intraday trading. Volatility rules.

A Reuters news article noted, "European PC sales rose 17 percent in 1999, although growth slowed to 11 percent in the fourth quarter as small-business buying tailed off in the run-up to the millennium date-change."

Compaq held on to its number one slot in Europe. But Apple was the fastest growing continental PC vendor with over a 52% unit sales growth in the quarter, according to the Reuters article.

The Nasdaq gained 45 points (1.08%) to close at 4234 with 1.9 billion shared traded for the second record volume session in a row and the third sequential record high. The Amex Biotech Index made a new high, while the business to business Internet stocks soared. The e-brokers lost some ground due to Ameritrade's weak earnings. The Nasdaq is up 4% for the week.

The Dow lost 99 points (0.88%) to close at 11251, on volume of 1.2 billion shares traded. One stock, Proctor & Gamble (PG), accounted for much of the weakness in the Dow. While interest rate sensitive financial and cyclical stocks continued their bearish ways for a fifth day, inspired by rising oil prices and a cold snap in the US Northeast. The Dow is down 4% for the week.

The S&P 500 lost 4.22 points (0.29%) to close at 1441.35. Nevertheless, the Russell 2000, a small capitalization index, set its forth sequential record high.

The bellwether 30-year US Treasury bond rebound 14/32 to 92 17/32 sending the yield south to 6.71% from 6.74% on Thursday.

The yield of the 10-year treasury bond has been higher than the yield on the 30-year bond all week. The inversion is caused by pressure on the 10-year note due to competition with corporate bonds, while the US government has been auctioning less 30-year treasury notes recently, putting upward pressure on the 30-year's yield. The invert position of the 10-year bond's yield with the 30-year's yield is an unusual situation that has occurred only 11 times since 1983, and is sometimes a precursor of an economic slow down.

In Apple related businesses, Adobe lost 2 3/16 to close at 62 7/8. Akamai gained 35 dollars to close at 269, while ARM Holdings gained 12 dollars to close at 157. Earthlink, Apple's new Internet partner, traded down 1 3/8 to 46 3/8.

Apple's Power PC partners: IBM gained 2 dollars to close at 121. Motorola gained 3 3/8 to close at 144 3/8.

Apple's competitors: Gateway announced 4th quarter earnings of $0.42 or $139.3 million excluding charges. Gateway's gross margin increased to 22.3%, still almost 4% less than Apple's blended gross margin. Apparently, analysts are confused about this company's future. Robertson Stephens reiterated a "buy" rating on the stock because they like Gateway's Internet strategy, while ABN Amro downgraded GTW. Gateway climbed 4 3/8 to end at 62 dollar a share.

Intel gained 2 5/16 to close at 97 15/16. Dell traded flat at 43 3/4. Hewlett Packard gave back 2 11/16 to close at 113 7/16, while Compaq gained 1 3/4 to close at 31 7/16. Shares of Microsoft slumped 2 1/4 to close at 103 3/4.

In other market news: The Wall Street Journal reported, "The continued rise in crude oil prices has left many investors fearful that the Federal Reserve may be even more aggressive than some had anticipated in raising interest rates in the first quarter to keep inflation in check. Crude prices on the New York Mercantile Exchange have surged more than $4 a barrel in the past week after members of the Organization of Petroleum Exporting Countries said they wouldn't boost output as expected in March, when the current supply-cutback agreement expires. Peter Cardillo, director of research at Westfalia Investments Inc., said Friday that any further increase in oil prices "would be negative for the blue-chip sector."

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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