US productivity lowered for the first time in 6 years. The federal government released productivity data for the first three months of 2001 and productivity dipped by 0.1%, down from the annualized 2% growth in productivity from the last three months of 2000. Analysts had expected a growth rate of 1.2% in productivity. The news sent inflation worries soaring, especially with the specific rise in unit wage costs, which increased 5.2%. Inflation worries tend to mean that the Fed will be less than aggressive in cutting interest rates as keeping inflation in check is secondary only to keeping the country out of recession. From a Reuters report:
"With labor markets softening and economic activity slowing, I would tend to view any uptick weire experiencing in wages and unit labor costs essentially as a lagging effect of the previous strength in economic activity," Anthony Karydakis, senior financial economist at Banc One Capital Markets in Chicago, told Reuters Television.
Indeed, in a speech delivered last month, Fed Chairman Alan Greenspan said that when the economy is slowing, weakening productivity should also be expected.
"No doubt, a period of weakness in measured productivity is likely to accompany the current slowdown in economic activity," Greenspan said in an April 27 speech, adding that such an event need not signal a weakened longer-term outlook for productivity gains.
"We have been too complacent about inflation. It has been placed on the back burner for too long and now it is shouting at us, demanding attention," said Sung Won Sohn, chief economist at Wells Fargo Bank in Minneapolis.
In the meanwhile, we have some technology companies like Cisco companies being upgraded. Cisco was upgraded this morning in advance of their earnings announcement which took place after the bell. According to a Reuters report:
"You have a battle between the analystsi upgrades of some technology stocks which is helping Nasdaq ... and what was some shockingly bad economic news," said Uri Landesman, chief investment officer with AFA Management Partners.
"This is not helping things," said Richard Cripps, chief market strategist at Legg Mason Wood Walker. "It takes away a little bit of leeway away from the Fed in cutting rates after the next meeting."
Speaking of Cicso, the company beat the Street by a penny. Cisco turned in profits of 3 cents per share; the consensus had been for Cisco to earn 2 pennies per share. Thatis all before one-time charges, however. Counting one-time charges, the company lost, get this, US$2.69 billion. That includes a staggering US$2.2 billion in *inventory write-offs* (Meaning inventory they are mothballing because they canit sell it). There are also restructuring charges built into that Big Whopper of a loss. Ciscois CEO John Chambers is still blaming the same market that has allowed other companies like Apple to show improvements. Reuters has a fine wrap up of the companyis earnings report.
All in all, the markets started off OK, but quickly took a dive once the productivity data was released. Volume for both the Down and the Nasdaq was very light again today. There seems to be a lot of money sitting on the sidelines. All eyes are going to be on the Fedis next meeting on May 15th in anticipation of a rate cut.
Apple got a nice bit of coverage for their new Apple retail store from CNBC yesterday. We sent out a reporter to do some snooping at the new location as well (include pics of the store front). PC stocks took a hit today as concerns over weakening demand and a price war being instigated by Dell worked had a dampening effect on investors. Apple was included in that hit, but Morningstar Joe Beaulieu analyst had some interesting things to say our favorite Mac maker and the PC industry. Mr. Beaulieu characterized Apple as an "interesting play" and said that the company was not as sensitive to the looming price wars. We have a full report on Mr. Beaulieuis comments.
Apple started off the day strong with the rest of the markets. AAPL and then followed the same downward trend of other tech stocks, settling into a narrow trading band. The stock traded in light volume in a range of 23.95 - 25.45.
Apple closed at 24.57, a loss of 0.39 (-1.56%), on light volume of 5,632,300 shares trading hands.
The Nasdaq closed at 2198.77, up 25.20 (+1.16%), on volume of 1,893,099,000 shares trading hands.
The Dow closed at 10883.51, a loss of 51.66 (-0.47%), on volume of 993,842,000 shares trading hands.
The S&P 500 closed at 1261.20, down 2.31 (-0.18%).
Adobe closed at 42.06, up 0.88 (+2.14%), on light volume of 3,095,200 shares trading hands.
Akamai closed at 10.33, a gain of 0.34 (+3.40%), on light volume of 2,361,900 shares trading hands. Apple is a large shareholder of Akamai.
Earthlink is picking up the dialup business of Morriss Communications in three different markets. ELNK closed at 12.01, down 0.74 (-5.80%), on heavy volume of 4,117,300 shares trading hands.
IBM closed at 117.70, up 1.94 (+1.68%), on light volume of 7,596,300 shares trading hands.
Macromedia closed at 20.65, up 0.45 (+2.23%), on volume of 1,488,400 shares trading hands.
Motorola announced they will be helping a company called Next Level sell VDSL infrastructure products on the international market. More importantly, the company declared their 217th consecutive quarterly dividend. The company will be paying out 4 cents per share. Lastly, Motorola was upgraded from a Neutral rating to a Buy by USB Piper Jaffray. MOT closed at 16.40, a loss of a nickel (-0.30%), on light volume of 8,979,600 shares trading hands.
Dell closed at 24.83, a loss of 1.08 (-4.17%), on strong volume of 50,650,600 shares trading hands.
Gateway closed at 18.00, a loss of 0.35 (-1.91%), on light volume of 2,118,800 shares trading hands.
Intel closed at 31.48, up 0.32 (+1.03%), on light volume of 41,507,900 shares trading hands.
Microsoftis Chairman Bill Gates has filed to sell 1 million shares of the company. The proceeds are expected to rake in US$67 million. The company is also going to use Australia as Guinea Pigs for their subscription-based software model. MSFT closed at 72.06, up 0.68 (+0.95%), on light volume of 37,540,400 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.