The upward guidance issued by Microsoft yesterday combined with Yahoo! and Motorola turning in results that met expectations to make for a strong market rally that lasted throughout the day. Techs benefitted the most as the Nasdaq gained 5.26%. The Dow tacked on its own 2.32% gain, and both indexes traded in the strongest volume we have seen in weeks. The Nasdaq traded some 1.8 billion shares, and the Dow traded nearly 1.4 billion shares. Itis not necessarily the land of milk and honey, however, as many analysts donit put much stock in the sustainability of this rally. From a CBS Marketwatch report:
"Many stocks went from being priced for perfection to being priced for disaster. But whether this rallyis sustainable depends on the outlook companies give as they report and on when the Fedis rate cuts begin to kick in," [David Powers, senior technology analyst at Edward Jones] said.
"The question is: Is this the start of something big or just another bounce from oversold conditions? I think itis more a case of the latter than the former," remarked Joe Liro, equity strategist at Stone & McCarthy Research Associates. "I donit see anything concrete on the fundamental front. [And] thereis no long-term established trend in the marketplace. I think weire more likely to see a sustainable rally after Labor Day than before. The risk/reward still isnit there -- itis too dangerous to bottom fish yet," he concluded.
The direction of the markets greatly depend on the nature of the earnings reports that will be issued during the next two weeks.
Industry News
The state of New Mexico has officially settled with Microsoft as one of the 19 states involved in Microsoftis antitrust trial. The stateis AG, Patricia Madrid, said "I am no longer persuaded a break-up remains appropriate or will ultimately be ordered by the courts." The terms of the settlement according to a Reuters report:
Under the settlement, New Mexico will get the benefits of any future settlement that Microsoft strikes with the government. The company has also agreed to pay the stateis legal costs, which add up to about $100,000, Madrid said.
Iowais AG says New Mexicois decision wonit make any difference in the overall battle. From an IndustryStandard report:
"I donit think itis going to make any difference," Iowa Attorney General Tom Miller, a leader of the statesi contingent, said of New Mexicois departure. Miller called Madrid "a good partner" but said the 18 states remaining, along with the District of Columbia, will continue to pursue the case.
Microsoftis stock moved higher by 6.7% in strong volume.
Apple Industry News
ZDNet has published a report that talks about developmental issues with OpenOffice (formerly StarOffice) for Mac OS X. According to the report, there is a dearth of developers for the Mac OS X porting effort. From the article:
"After Sun released the OS X porting information, I was hoping to see some people take over and start finishing the first portion of the port, which is get it running. Since nobody that I know of has done anything, I figured something should be done," [Scott Hutinge] said.
"As far as I know," [Kevin Hendricks, associate professor of operations and information technology at the Richard Ivey School of Business at the University of Western Ontario in London, Ontario] said, "only a few developers have taken up the [Mac OS X porting] effort, and that only happened quite recently. The effort desperately needs more help if it is to progress."
AAPL opened higher, and kept on truckini throughout the day for another 8% gain on strong volume. The stock has risen more than 14% during the last two days, helped in part by the euphoria created by Microsoftis earnings guidance, and helped in part by optimism that Apple would also post good results. AAPL traded in a range of 23.30 - 24.81 for the day, losing some 45 cents in the last 20 minutes of trading, likely the victim of some profit taking.
Apple closed at 24.36, a gain of 1.82 (+8.07%), on strong volume of 10,979,800 shares trading hands.
The Nasdaq closed at 2075.74, a strong gain of 103.70 (+5.26%), on volume of 1,890,259,000 trading hands.
The Dow closed at 10478.99, a strong gain of 237.97 (+2.32%), on volume of 1,387,216,000 trading hands.
The S&P 500 closed at 1208.14, up 27.96 (+2.37%).
Adobe closed at 42.94, higher by 1.50 (+3.62%), on strong volume of 4,941,900 shares trading hands.
Akamai closed at 8.20, up 4 bits (+6.49%), on light volume of 1,901,500 shares trading hands. Apple is a large shareholder of Akamai.
Earthlink closed at 14.60, up 0.57 (+4.06%), on strong volume of 2,408,400 shares trading hands.
IBM closed at 107.25, up 3.40 (+3.27%), on strong volume of 8,767,200 shares trading hands.
Macromedia closed at 17.75, a gain of 1.23 (+7.45%), on light volume of 436,700 shares trading hands.
Motorola closed at 18.15, up 2.48 (+15.83%), on tripe the normal volume of 40,478,600 shares trading hands. Motorola manufactures the processors used in Appleis Macintosh line.
Dell closed at 27.37, higher by 1.39 (+5.35%), on volume of 32,959,400 shares trading hands.
Gateway closed at 15.16, up 1.05 (+7.44%), on strong volume of 3,302,400 shares trading hands.
Intel closed at 30.10, a gain of 2.04 (+7.27%), on volume of 49,245,000 shares trading hands.
Microsoft closed at 71.60, up 5.10 (+7.67%), on strong volume of 64,062,900 shares trading hands.
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