Bears Steamroll The Markets, Apple Down 8%

The markets went down, down, down, in a burning ring of fire today. Both the Dow and the Nasdaq opened up with steep losses that included an 80 point drop in the Nasdaq within the first half hour of trading, bringing the Nasdaq below 2000 for the first time since December of 1998. Over the past year, the Nasdaq has dropped in value by some 62%, the worst Nasdaq decline ever, and one which has the dubious distinction of surpassing the 1973-1974 bear market when the Nasdaq declined 59.9%. Todayis loss alone was 6.30%.

The Dow did better in terms of percentages, suffering a 4.10% loss, but did take the 5th biggest loss in history in strict point loss terms. The Dow lost 436.37 points today, 200 of which came in the last hour of trading. The index had traded in a narrow band throughout the day after the declines in the first half hour of trading.

"There is certainly fear out there -- fear and disappointment," said Edgar Peters, chief investment officer at PanAgora Asset Management Inc., which manages $17 billion. "So many people believed in the New Economy story to such an extent and to see all those dreams completely dashed in front of you is demoralizing."

"What we are seeing today is a lot more anxiety and capitulation in some respects," said Henry Herrmann, chief investment officer at Waddel & Reed, which manages $4 billion. "People are starting to get really worried. They are just selling."

In other words, we are paying for the insane valuations that were politely characterized as "irrational exuberance" by Alan Greenspan almost two years ago. Despite the supposed fear, volume for both indexes was barely more than moderate. So while, the direction was almost straight down, there was not the kind of force behind the downward pressure that one might expect from such a steep decline. No matter how you slice it, however, we are officially in a bear market.

Speaking of Alan Greenspan, the Fed Chairman is taking his share of heat for the current near market as analysts and economists are complaining the Fed has not moved fast, nor strong enough to lower interest rates that would loosen the countryis monetary supply. The Fed is scheduled to meet on March 20th, and is not expected to lower rates ahead of that meeting. It is expected that rates will be cut by 50 basis points (a half point) at that time, though many analysts are calling for a stronger cut. The problem with such a move is that employment figures and other economic indicators have not indicated much of a slowdown, which leaves the Fed worrying about inflation should interest rates be cut too much.

Tech stocks took the brunt of todayis hit. The stocks we track in the Stock Watch were all in the Red. Since that describes the rest of the market as well, this shouldnit come as too much of a surprise. The box makers were all hit, but Apple took the hardest hit at all, losing almost half of itis loss for the day in the final hour of trading. Volume for AAPL was moderate. Apple got a little praise from Forbes magazine today concerning their new 733 MHz PowerMac that comes without the SuperDrive, and includes a CD-RW instead. That didnit seem to help the stock, however.

Apple fell more than 8%, and dipped below 20 for the first time in 5 trading sessions. The stock opened up below 20, and traded in a range of 18 1/8 - 19 7/8. There was no other direct news that powered Appleis decline. Volume for the stock has been light for the last few weeks.

Apple closed at 18 5/8, a loss of 1 5/8 (-8.02%), on volume of 6,981,800 shares trading hands.

The Nasdaq closed at 1923.38, down 129.40 (-6.30%), on volume of 2,150,877,000 shares trading hands.

The Dow closed at 10208.25, down 436.37 (-4.10%), on volume of 1,231,613,000 shares trading hands.

The S&P 500 closed at 1180.02, a sharp loss of 53.40 (-4.33%).

Akamai resumed its downward trek and closed at 10 7/16, a loss of 11/16 (-6.18%), on strong volume of 3,652,400 shares trading hands. Apple is a large shareholder of Akamai.

Adobe released Acrobat 5 today, its cross-platform document builder. ADBE closed at 26, down 15/16 (-3.48%), on light volume of 3,280,800 shares trading hands.

IBM closed at 95.49, down 3.80 (-3.83%), on strong volume of 14,493,500 shares trading hands.

Motorola closed at 15.00, a loss of 0.55 (-3.54%), on strong volume of 20,824,100 shares trading hands.

Earthlink showed relative strength in the face of the overall market downturn. ELNK closed at 9 21/32, down 7/32 (-2.22%), on volume of 2,147,800 shares trading hands.

Gateway closed at 15.16, a loss of 0.69 (-4.35%), on light volume of 1,887,5000 shares trading hands.

Dell is having a performance problem with its MSN powered e-mail service. Note our lack of surprise. DELL closed at 22 1/16, a loss of 1 5/16 (-5.61%), on light volume of 32,620,400 shares trading hands.

Hewlett Packard closed at 29.88, down 0.37 (-1.22%), on light volume of 7,474,100 shares trading hands.

Intel closed lower at 27 3/4,a loss of 1 11/16 (-5.73%), on strong volume of 59,593,100 shares trading hands.

Microsoft surpassed Appleis percentage loss, and actually showed the highest percentage loss of the stocks we track. The company announced a new partnership with eBay involving Microsoftis .Net services as Microsoft continues to buy their way in .Net acceptance. MSFT closed at 51 15/16, a loss of 4 3/4 (-8.38%), on strong volume of 57,182,300 shares trading hands.

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 Appleis stock activity, visit our updated Apple Stock Watch Special Report. You can also check out our Apple Financial Boards, a new moderated forum for Apple Investors and people who are interested in Appleis financial dealings.