Greenspan's Insight Inspires Confidence, Stocks Soar, But Not AAPL

Mr. Greenspanis calm and intelligently reassuring words snapped the stock markets out of their gloomy mood, setting off serious high volume rallies. However, Appleis stock barely participated in the record-breaking tech rally. Worse, after the markets closed, Cupertino announced it expects to report the companyis first quarterly loss in three years on January 17.

Alan Greenspan, speaking before a group of bankers, indicated that the Federal Reserveis outlook on the economy has changed substantial since October. Mr. Greenspan now sees "risks" for an economic downturn greater than previously anticipated, but said todayis economic weakness isnit nearly as grave as the 1998 financial crisis.

Mr. Greenspan said that he is aware of the need to ensure the economic growth pendulum doesnit swing too far to the negative. Wall Street took his careful words to represent a de facto neutral bias for the Federal Reserve with no chance for further interest rate hikes. Investors were reassured that the economy is in good hands — Mr. Greenspan is unlikely to allow a serious recession to occur during his watch.

Mr. Greenspan canit take all the credit for todayis rally. After a Florida judge refused to grant Al Goreis lawyers a vote recount yesterday afternoon, stocks jumped in after hours trading to kick off todayis broad rally.

Appleis stock climbed 5/16, or 1.87% to 17 dollars on volume of 9.6 million shares.

The fact that AAPL couldnit take advantage of todayis record stock rally is bad news for Apple shareholders. It may indicate Appleis future is so obscure investors canit imagine how this company is going to grow. Even after the market appears to have discounted everything that could go wrong with Apple, few want to rush back into the stock until some clarity emerges on Appleis latest sales figures and future business strategies.

See the latest Apple Trader column for more details.

After the markets closed, a CBS MarketWatch article reported, "Citing a slowdown in personal computer sales, Apple Computer on Tuesday said first-quarter revenue will fall "substantially" below expectations and expects to report its first quarterly loss in three years."

The article continued,"Apple said the loss resulted from a slowdown in computer sales, unplanned salespromotions and marking down of prices to move inventory, as well as charges due to cancellation of components."

Expect tomorrow to be a down day for Appleis stock. posted a video interview with former Apple CEO John Sculley. Although most of the interview is dedicated to Mr. Sculleyis venture capital strategies, towards the end Mr. Sculley congratulates Steve Jobs for the good work he has accomplished since his return and suggests off-handedly Apple should consider merging with 3Com. See the full Mac Observer article.

The Nasdaq soared 274 points or 10.48%, its biggest percentage gain ever, to close at 2889 on high volume of 2.4 billion shares.

The Nasdaq has retested lows and bounced with a 25 to 13 advancing stocks to declining ratio on huge volume. Traders are optimistic that this is the beginning of a so-called Santa Claus rally. Short traders rushed to cover positions and eager individual investors snapped up shares on fears of missing the market bottom. However, institutional buyers have yet to really engage this market, which may bode well for the rest of the week. The Nasdaq has a long way to climb back. The index is still 45% below it March 10th high.

The Dow rallied 338 points or 3.21% to close at 10898 on volume of 1.39 billion shares, its biggest point gain ever.

Crude oil prices dropped about 5% to 4-month lows today, further reinforcing the broad rally on the NYSE.

The S&P 500 climbed 51.57 points or 3.89% to 1376.

In Apple related businesses: Akamai jumped 11 3/16 to 37 1/2. Adobe rallied 8 5/8 to 76 11/16. IBM jumped 5 dollars to 103 3/8. Motorola gained 5/8 to 19 dollars.

Dell announced plans to expand server sales and services, predicting that its new high-end servers will over take Compaqis market share in the business server market next year. Dell climbed 1 7/16 to 20 1/4.

Speaking of going wireless, Compaq is adding a MultiPort to its laptops to support 802.1 1b wireless local area networks and Bluetooth standards. Compaq gained 1.63 to 24.40.

Shares of Microsoft jumped 3 7/16 to 59 7/8. Intel gained 3 1/16 to 36 dollars. Hewlett Packard climbed 2 to 35 dollars. Gateway was higher by 0.82 to 18.78.

In economic news: Factory orders fell 3.3% in October on weak demand for transportation and electronic products. Octoberis weakness comes on the heels of a 1.1% gain in September.

According to the Wall Street Journal, "Orders for electronic and electrical equipment, including household appliances and communications equipment, sank 9.9%, largely reflecting a drop in demand for electronics components. The month before, such orders rose 8.5%. Orders for durable goods fell 5.6%, while nondurable goods orders were down 0.2%."

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.