Dow Rallies, Nasdaq Lags and AAPL Hugs Lows

The Dow powered ahead driven by hopes for a more generous tone from the Federal Reserve at their next FOMC meeting, but the Nasdaq wavered on continued fears that a hard landing for the economy will crush tech stock earnings estimates for next year. Otherwise it was a very distracting day in the stock market as all eyes turned to the rapidly changing tide of the U.S. presidential election.

Bellwether Cisco Systems (CSCO) is meeting with analysts this afternoon in what is expected to be a bullish view of the road ahead for the networking giant. Investors will be watching closely for hints of inventory issues which may effect other tech interests such as JDS Uniphase, (JDSU) Cisco hit a 52-week low for a while today, closing down 2 11/16 to 45 13/16.

The Wall Street Journal reported that the Fed could shift its economic outlook when it meets in December leading to a neutral tightening bias. Most traders now believe the chance of further interest rate hikes is almost zilch. However, rate cuts arenit considered likely until early in 2001. Alan Greenspan is speaking before a group of bankers tomorrow morning in what is sure to be a closely monitored event by the stock markets.

Meanwhile, the dollar hit 2-month lows against the Euro. Over the past few years the Nasdaq and the strength of the dollar have been highly correlated until the most recent down turn began in September, when the dollaris price continued to rise while the Nasdaq nose dived. The divergence has currency traders worried that the dollar could weaken considerably in the coming months with deleterious effects on stock prices.

Appleis stock lost 3/8, or 2.20% to 16 11/16 on volume of 6.6 million shares.

Reports are circulating that Apple has recently allowed Circuit City to sell G4 Cubes.

The Mac Observer reports IBM has 700 MHz G3 chips available. However, Apple isnit expected to ship 700 MHz Macs any time soon because, "Apple will not ship a "consumer" machine with a 700 Mhz G3 and a "professional" machine running only a 500 Mhz G4. This is necessary from Appleis perspective, but unfortunate for the Mac using public."

Late last week a C/NET article analyzed Appleis high inventories in light of new evidence that PC demand is significantly lower than last year at this time and concludes that Apple is going to have extraordinarily tough sledding this holiday season. See the full Mac Observer article.

The Nasdaq shed 29 points (-1.10%) to close at 2616 on volume of 1.7 billion shares.

The Dow rallied 193 points (1.86%) to close at 10566 on volume of 1.06 billion shares. The marketis internal statistics werenit as positive as the gain might suggest. Ironically, todayis rally was based largely on the emerging consensus that the Fed wonit raise interest rates because the economy is so weak.

The S&P 500 climbed 9.82 points (0.75%) to close at 1325.05.

In Apple related businesses: USB Warburg started coverage on Akamai with a buy rating as the stock skims all time lows. Akamai lost 11/16 to 26 5/16. Adobe rallied 3/4 to 68 1/16. IBM jumped 2 3/4 to 98 3/4.

Earthlink, trading near 52-week lows, launched an advertising campaign targeting AOLis market share. The nationis No. 2 ISP lost 3/32 to 6 11/32.

Motorola said it will license processor technology from ARM Holdings (ARMHY) for its wireless products and applications. Apple holds an investment in ARM Holdings. Motorola lost 3/16 to 18 3/8. ARM Holdings gained 1 1/8 to 23 3/8.

Intel dived 1 1/16 to 33 dollars for a new 52-week low as analysts worry about the chip makeris ability to meet earnings for next year.

In spite of the grim holiday sales for PC vendors in the U.S. Compaq says that revenues from IT service sales in Asia will increase by more than 20% each year through 2003 due to the rapid growth of Internet usage in Asia. Compaq lost 0.03 to 22.77.

According to Bloomberg News:

"Internet penetration in Asia, excluding Japan, will increase by a compound annual growth rate of 27 percent through 2004, according to a recent report by Morgan Stanley Dean Witter. The brokerage increased its estimates for the number of Internet users by the end of 2004 by 12 percent in September to 176 million, as growth in penetration exceeded expectations."

Gateway was lower by 1.16 to 17.96, while Dell gained 3/8 to 18 13/16.

In economic news: The index of leading indicators dropped by 0.2% to 105.5 in October as expected by economists and new home sales slipped by 2.6% in October after soaring in 11.9% in September. It was the ninth consecutive month that the Leading Index has been either flat or declining according to the Conference Board.

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.