Dow Trends Higher While Tech Stocks, Apple Included, Take a Fall

Tech stocks languished and the computer hardware sector slid 3.5%. There wasnit any breaking news to account for the decline. Nervous investors just decided to take some profits after this weekis attempt at a mini-rally. It was a particularly bad day for Appleis stock, which lost the entire weekis gains to close down more than 7%.

A Reuters article noted that investors are in a cautious mood, "Bullish comments from one of Wall Streetis most influential market watchers, Abby Joseph Cohen, failed to rally the market. Investorsi worries that high oil prices and a weak euro will bite into corporate profits are "overdone" and will be "short-lived," according to Goldman Sachsi top strategist."

Crude oil prices fell $1.24 per barrel on the news that President Clinton may release oil from the strategic oil reserves, against the recommendations of Fed Chairman, Alan Greenspan.

Apple sank 4 23/64 to close at 56 11/16 on volume of 8.8 million shares. Todayis big sell-off happened with twice normal volume, a sign that many investors are taking some money off of AAPL while they sort out the impact Mac OS X will have on the companyis revenues and market share. Meanwhile, a research note from Morgan Stanley Dean Witter raised concerns that Appleis 4th quarter sales could be depressed by new product rollouts.

Kevin Pedraja, a public-relations executive in San Francisco, purchased a G4 Cube and then found cracks in its case, but he couldnit get any satisfaction when he called to complain directly to Apple. Angry over Appleis inattention, he faxed a letter to Steve Jobs threatening to go to the press with his story. Apple then immediately offered to replace his cracked Cube with a new one.

What happened next was totally unexpected. According to the Wall Street Journal, "Mr. Jobs called Mr. Pedraja on his cell phone. During the five-minute conversation, Mr. Jobs didnit exactly offer an apology, Mr. Pedraja recalls, but he did stress that he wanted to come to some sort of resolution. "I was pretty impressed that he would call me personally," says Mr. Pedraja. "Not many CEOs would do that." Shortly thereafter the PR executive received a new Cube -- so far, problem free. No word on whether Apple will replace other cracked cubes, but an Apple spokeswoman says it isnit unusual for Mr. Jobs or other Apple executives to check in with concerned customers from time to time."

Apparently, Steve Jobs having to micro-managing customer complaints didnit inspire investor confidence in Appleis stock.

The Nasdaq shed 68 points (-1.76%) to close at 3828 on volume of 1.58 billion shares. The Philadelphia Semiconductor Index ($SOX) lost 4.5% today for a loss of 14% just this month, although the index is still higher by about 40% year-to-date.

The Dow climbed 77 points (0.73%) to close at 10765 on volume of 1.08 billion shares. Morgan Stanley Dean Witter (MWD) missed earnings, dragging many financial stocks lower. The broker blame the low market volatility in August for hurting its trading orders revenue. GoodYear Tire (GT) issued an earnings warnings. It was the beaten down retail and drug stocks which floated the Dow higher today.

The S&P 500 dropped 2.29 points (-0.16%) to close at 1449.05.

In Apple related businesses: Akamai lost 2 dollars to 58 5/8. Adobe fell 3/4 to 157. Earthlink lost 3/16 to 10 dollars. Motorola lost 1 3/8 to 33 dollars. IBM beat the trend climbing 1 5/16 to 126 1/16.

Bloomberg reported, "SCI Systems Inc. Chief Executive Eugene Sapp said sales in the contract electronics- manufacturing industry will quadruple in the next seven years as companies such as Nortel Networks Corp. hire others to build their products."

Appleis competitors: Dell lost 5/8 to 37 15/16 after the company announced design changes to its OptiPlex line of PV. C/Net News commented, "Although these machines arenit receiving the same sort of design acclaim as Apple Computeris iMac or G4 Cube computers, aesthetics are only half the point. Because of their small size, PCs like the iPaq are cheaper to manufacture and ship. Dell executives said the company can manufacture 40 percent more of these small systems on the same production lines as standard-size OptiPlex computers.

Gateway was lower by 2.65 to 56.80. Compaq gave back 5/16 to 30 7/8. Intel fell 1 1/2 to 61 1/2. Hewlett Packard lost 2 7/16 to 99 15/16.

Shares of Microsoft lost 1/16 to 64 3/16. The Boston Globe wonders if Microsoftis best years are behind it. "There are signs that the company may not be able to sustain its blistering growth. Its stock is down 40-plus percent since the beginning of the year. Sales of its next-generation operating system, Windows 2000, have been off to a slow start, depressing revenues for the last quarter of its 2000 fiscal year. Microsoftis sales grew just 16 percent in its fiscal year ended June 30, the first time in at least 10 years that the rate has dipped below 20 percent."

The Mac Observer Stock Watch Virtual Portfolio: Lucent (LU) lost another 1 13/16 to close at a new 52-week low of 33 9/16 . Telecom stocks were slammed again due to Sprint PCS (FON) warning yesterday that its wireless business is slowing.

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 Apple Stock Watch Special Report.