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Apple's Stock Soars $3 1/2 As The Nasdaq and Dow Rally in Tandem

Apple Stock Watch: - Apple's Stock Soars $3 1/2 As The Nasdaq and Dow Rally in Tandem

by , 5:20 PM EDT, August 17th, 2000

Tech stocks finally rallied decisively today helped by good earnings from Hewlett Packard (HWP) and Corning (GLW) and supported by the fifth day of uptrending semiconductor stocks. Apple broke-out above $50 per share for the first time since July 31st.

A small article at Macworld Online reports that, "CFO Fred Anderson is confident that the company will report 35 per cent revenue growth – rising from $6 to $8 billion – in its results for the financial year 2000, which ends September 30." Perhaps in response to Mr.Anderson's confidence and encouraged by AAPL's low valuation, a number of large institutional investors increased their stakes in AAPL today.

In the broader market, investors are confident that the Federal Open Market Committee will not raise rates for the eighth time in 15 month when it meets once again August 22nd and this lends an underlying strength to the equity markets.

Meanwhile, the stock markets are watching the Democratic Convention in LA this week and polls show Al Gore gaining rapidly on George W. Bush. Tonight, Mr. Gore's acceptance of his party's nomination at the convention could be a critical turning point in the Presidential elections.

When the stock markets' aggregate opinion is for the incumbent political party to win the US presidential elections in November, the stock markets have historical climbed higher in sympathy. Investors love the predictability of an incumbent government in Washington, regardless of whether it's a Democrat or Republican administration. Likewise, when the stock markets feel the out-of-power party will win, the markets cautiously pull back from the unknown variable of the transition ahead. The recent bearish trend in equity markets could have been, in part, a response to July polls showing George Bush with a decisive lead.

Apple climbed 3 1/2 or 7.22% to close very near the day's high at 52 dollars on volume of 4 million shares.

Apple's stock closed at its highest level since July 27th as AAPL appears to be starting an uptrend off the second dip of a double bottom chart formation. This interpretation fits well with the time of year. Apple's stock typically trends higher towards Christmas in anticipation of strong seasonal sales.

The Nasdaq rallied 80 points (2.13%) to close at 3943 on volume of 1.3 billion shares.

The Dow climbed 45 points (0.41%) to close at 11053 on volume of 869 million shares.

The S&P 500 rose 15.42 points (1.04%) to close at 1495.27.

In Apple related businesses: Akamai gained 1/16 to 75 1/4. Earthlink climbed 1/8 to 9 3/4.

Motorola gained 1/2 to 36 15/16 after the company announced a licensing deal with Incyte Genomics (INCY) to allow Motorola access to Incyte's gene database and gene patent portfolio while Incyte will receive royalties on sales of Motorola's gene expression chips.

Yesterday, IBM said it, "plans to invest $100 million in life-sciences technology over three years, in a bid to capitalize on what it sees as a $9 billion market opportunity. IBM said the money will be used to develop information technology and to pursue partnerships that'll hasten the interpretation of genetic code." IBM climbed 1/16 to 122 7/16.

Adobe bounced 8 9/16 to 124 1/2 dollars today after yesterday's sell-off.

Apple's competitors: Dell gained 9/16 to 39. Gateway was higher by 2 3/16 to 64 3/16. Compaq gave back 1/16 to 32 15/16. Shares of Intel climbed 2 1/8 to 70 3/16.

Microsoft gained 13/16 to 71 13/16. A new strain of the "I love You" virus may be back to haunt Microsoft's Outlook application.

Hewlett Packard lost 13 1/8 to 107 3/4 after gaining 9 dollars yesterday on expectation of great earnings. HP reported earnings of $0.97 per share, an increase of 37% from a year earlier. Nevertheless, investors were disappointed. CNET News reported:

"The uneasiness stems from the quality of HP's earnings surprise. At 97 cents a share, HP handily beat analysts' expectations of 85 cents a share. However, some of the surprise gains came from international currency conversions and cost-cutting. HP also missed its overall revenue projections and revenue expectations for the Unix market, said Kurt King, an analyst with Banc of America Securities. At its analysts meeting on May 31, HP told analysts revenue would grow 15 percent, while Unix revenue would grow 26 percent. Instead, revenue grew 14.52 percent, while Unix sales only grew about half that."

In economic news: Jobless claims broke through 300,000 last week which is more than economists had expected. Rising jobless claims support other economic data pointing towards a decelerating economy.

The Mac Observer Stock Watch Virtual Portfolio is coming back on strength in Apple and IBM.

For full quotes on all the companies mentioned in this article, we have assembled this set of quotes at Yahoo! for your reference. For other stories regarding Apple's stock activity, visit our Apple Stock Watch Special Report.

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