The Fed lowered interest rates by 50 basis points (a half point) today, and the markets reacted by euphorically losing ground in the last hour of trading. Those wacky traders... The Nasdaq gave up a 40 point gain to close less than 4 points in the black. The Dow took the first hour after the rate cut was announced to go 100 points higher (under 75 points, to positive 25 points), only to end the day a bit more than 4 points in the red. You know, you ask and you ask and you ask, then when Uncle Greenspan gives you a big present you decide you donit care anymore.
What makes todayis activity even more interesting is that the Fed not only cut rates by the full hoped for/expected 50 basis point cut, but the announcement accompanying the cut included comments that suggested that the cutting wasnit over. From an Upside Today report:
"The erosion in current and prospective profitability, in combination with considerable uncertainty about the business outlook, seems likely to hold down capital spending going forward," the Fed said in a press release. "This potential restraint, together with the possible effects of earlier reductions in equity wealth on consumption and the risk of slower growth abroad, continues to weigh on the economy." But the Fed also said that inflation is unlikely to pose a problem in the face of economic risks "weighted mainly toward conditions that may generate economic weakness in the foreseeable future."
So be it. The real problem is that we have had 5 rate cuts this year and we arenit seeing big huge jumps in corporate profits. Thatis to be expected as it usually takes 6 months to a year before we truly see the impact of rate cuts. Until some major companies start offering guidance towards higher profits and higher sales, we will probably be stuck with that jumpy nervous kid from next door subbing for the only-slightly less nervous group we know as "investors."
Volume increased on the Dow and the Nasdaq, but was still considered light. Techs ended mixed, with the stocks we track in the Stock Watch a fair representative sampling.
On to what we really care about, AAPL. Apple showed off their fancy-schmancy new retail stores, and opened a new retail section of their Web site that includes some of the most fiery rhetoric we have gotten from Cupertino in years. The markets rewarded AAPL at first by keeping the stock in positive territory throughout the day. Once the Fedis rate cuts were announced, the stock was sent up another 50 cents. It was to no avail, however, as the last 25 minutes of trading sent AAPL back into negativeland. Investors and analysts are mixed on whether or not Apple can make the stores pay off. Apple says that retail operations will break even in the December quarter and will turn a profit in fiscal 2002. Volume for the stock was very light, trading in about half the normal volume. The dayis range was 23.04 - 24.85.
Apple closed at 23.18, a loss of 0.11 (-0.47%), on very light volume of 4,232,900 shares trading hands.
The Nasdaq closed at 2085.58, up 3.66 (+0.18%), on volume of 1,711,414,000 shares trading hands.
The Dow closed at 10872.97, down 4.36 (-0.04%), on volume of 1,048,363,000 shares trading hands.
The S&P 500 closed at 1249.44, up 0.52 (+0.04%).
Adobe closed at 38.79, a loss of 0.36 (-0.92%), on light volume of 3,827,600 shares trading hands.
Akamai closed at 9.16, up 0.26 (+2.92%), on strong volume of 3,647,700 shares trading hands. Apple is a large shareholder of Akamai.
Earthlink announced a deal with OfficeMax to co-promote each otheris services. ELNK closed at 12.75, a gain of 0.53 (+4.34%), on light volume of 819,700 shares trading hands.
IBM closed at 113.58, up 1.02 (+0.91%), on very light volume of 5,873,400 shares trading hands.
Macromedia closed at 19.41, down 0.40 (-2.02%), on volume of 1,216,300 shares trading hands.
Motorola is considering selling its Integrated Information Systems Group, a "government communication and information technology business." MOT closed at 14.96, a loss of 0.78 (-4.96%), on volume of 13,488,000 shares trading hands.
Dell closed at 24.49, a gain of 0.30 (+1.24%), on light volume of 26,444,300 shares trading hands.
Gateway closed at 17.69, a loss of 6 cents (-0.34%), on light volume of 1,215,200 shares trading hands.
Intel closed at 27.20, down 0.21 (-0.77%), on light volume of 47,319,300 shares trading hands.
Microsoft bought back 17 million shares of MSFT at a cost of some US$264 million. MSFT closed at 68.27, a loss of 0.45 (-0.65%), on light volume of 30,694,800 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.