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November 12th 1999

[4:20 PM] The Apple Stock Watch: The Dow Plays Catch-up, Apple Retrenches at 90 5/8
by Wes George

The tech stocks head faked a continuation of their rally on the Nasdaq this morning then headed south, but they couldn't be held down, roaring back to post yet another all time high, in spite of Intel, Microsoft, Cisco and Dell trading down. What should of been the Dow's day in the sun, as the NYSE put in a strong advance, was dimmed by the Nasdaq's disdain for gravity.

The US 3rd quarter productivity numbers showed strong growth with an increase of 4.2%. Economists expected closer to a 3.0% gain. Labor costs took a downturn, advancing only 0.6% during the quarter, much better than the expected 1.4% rise analysts were looking for.

Meanwhile, the Commerce Department said retail sales were flat in October. The economy is experiencing rapid growth with less inflation because increases in productivity are keeping wages and costs down. Just two more trading days till the Federal Reserve's policy meeting, but few seemed worried.

The Nasdaq rose 23.6 points (0.74%) to close at 3220.89 on a volume of 1.4 billion shares traded, the 4th highest volume in history. Today was the 10th time in 11 sessions that the Nasdaq has set new record highs. The Nasdaq ends the week up 46% year to date, led forward today by the Internet stocks, the online brokers, and financial stocks.

Semiconductor issues experienced heavy profit taking in spite of Merill Lynch's upgraded to its price target on the sector yesterday. Merill said that demand for computer chips will stay high for several years.

The Dow settled near the day's high, up 174 (1.64%) to close at 10769 on a volume of 880 million shares, led by strong financial stocks. This places the Dow in range to challenge the significant 10800 resistance level next week which, if broken, could lead to a broadening of the rally. Moreover, the good productivity numbers out this morning may give the bulls some confidence next week.

The S&P 500 advanced 14.5 points (1.05%) to close at 1396.

Apple spent the day retrenching in the 90 range, down 1 5/8 (1.76%) to 90 5/8 on less than half the average volume. Speculation that Apple is planning a serious retail development project leaked out beyond the Mac community today. Perhaps, investors took this as a nod to the success of Gateway's Country Stores concept since Gateway rose 5 5/16 to 81 5/8 with little explanation.

Intel (INTC) got whacked today with a downgrade by Joe Osha of Merrill Lynch to accumulate from buy. Mr. Osha said that the next generation of Intel chips, "will prove disappointing to investors who have high expectations for the first generation of that product." Intel lost 3 1/4 (4.0%) to end at 76 3/16.

Advanced Micro Devices Inc. (AMD) reported that it would break even in the 4th quarter turning around a recent downtrend in earnings. Advanced Micro lost 1 9/16 to close at 26 11/16.

Dell was down 1 11/16 to close at 41 3/4 after reporting 3rd quarter earnings on target with analysts' lowered expectations of US$0.18 per share. Dell's earnings for the quarter had been revised down from $0.20 per share because high DRAM prices have eroded Dell's profit margin. Dell's earnings showed a decline of 25% over the same period a year ago. Analyst Andy Neff of Bear Stearns commented that, "Hardware profitability is under pressure and Dell is unable to offset it". Mr. Neff revised downward his profit forecast for the next fiscal year to US$1.00 per share from US$1.05.

Microsoft (MSFT) lost a 1/2 point to close at 89 1/8.

In Apple related stocks, Adobe posted gains, up 2 11/16 to 75 1/8, and so did Macromedia, up 15/16 to 58 15/16. Akamai, Arm Holdings, Motorola, and Symantec were down.

Oracle hit a new all time high, up 3 1/16 to close at 65 1/8, boosted ahead by news that they plan to collaborate with IBM to develop a Unix based OS designed for the next generation of Intel processors. IBM advanced 7/8 to 95 7/8.

Sun Microsystems was also very strong today up 4 9/16 to 48 5/16 after shareholders approved a two for one stock split.

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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